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Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $.78 to $.80. The following annual interest rates apply: Currency
Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $.78 to $.80. The following annual interest rates apply:
Currency Lending Rate Borrowing Rate
Dollars 7.10% 7.50%
New Zealand dollar (NZ$) 6.80% 7.25%
Baylor Bank has the capacity to borrow $5 million. If Baylor Banks forecast is correct, what will its dollar profit be from speculation over the fiveday period?
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