Answers:

72,000,000

64,000,000

80,000,000

56,000,000

Suppose that Denver Financial Co. expects the exchange rate of the New Zealand dollar (NZ$) to appreciate from its current level of 0.5 to 0.52 in 30 days. Denver Financial seeks to capitalize on this potential opportunity. Suppose that Denver Financial begins by borrowing $40,000,000 and converting it to New Zealand dollars (NZ$). The following table shows the short-term interest rates (annualized) in the interbank market. Currency U.S. Dollars New Zealand Dollars (NZ$) Lending Rate (Adjusted for 30-day period) 6.62% Borrowing rate (Adjusted for 30-day period) 7.10% 6.86% 6.38% After exchanging $40,000,000 for New Zealand dollars, Denver Financial will have NZ (New Zealand dollars). Grade Step 1 TOTAL SCORE: 0/4 (to complete this step and unlock the next step)