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Assume the following information: Interest rate on borrowed euros is 5 percent annualized Interest rate on dollars loaned out is 6 percent annualized Spot rate
Assume the following information: Interest rate on borrowed euros is 5 percent annualized Interest rate on dollars loaned out is 6 percent annualized Spot rate for 0.8333 per dollar (one = $1.20) Expected spot rate in five days is 0.85 per dollar Alonso Bank can borrow 10 million What is the euro profit to Alonso Bank over the five-day period from shorting euros and going long on dollars?
A. 150,311.11
B. 177,111.11
C. 201,555.56
D. 256,323.33
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