Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $.48 to $.50. The following annual interest rates apply:

Currency Lending Rate Borrowing Rate

US Dollars 7.10% 7.50%

New Zealand dollar (NZ$) 6.80% 7.25%

Baylor Bank has the capacity to borrow either NZ$10 million or $5 million.

360 days make a financial year for Baylor Bank.

10. If Baylor Banks forecast if correct, what will its dollar profit be from speculation over the five-day period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)?

1. $521,325.00
2. $500,520.00
3. $104,262.00
4. $208,044.00
5. None

In the above, problem, what would be the amount of interest payment in NZ$ if borrowed amount is converted and invested in NZ$?

1. NZ$9,837.96
2. NZ$9,910.20
3. NZ$9,950.90
4. NZ$9, 980.00
5. None

What would be total interest in US$ on the borrowed US$?

1. US$5,108.13
2. US$5,160.43
3. US$5,208.33
4. US$5,250.00
5. None