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Assume the annualized rates for lending and borrowing in the US are 5.89% and 6.35%. Likewise, in Canada, the lending and borrowing rates are 5.60%
Assume the annualized rates for lending and borrowing in the US are 5.89% and 6.35%. Likewise, in Canada, the lending and borrowing rates are 5.60% and 6.00%. Malone Bank can borrow either $20 million or 30 million Candian Dollar. Malone Bank expects the spot rate of the canadian dollar to be $0.82 in 60 days (the current spot rate is $0.80) What is Malone Bank's profit or loss from speculation if the spot rate 60 days from now is indeed $0.78?
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