1. Baylor Bank believes the New Zealand dollar will depreciate over the next 6 months from $.41/NZ$ to $.38/NZ$. The following 6-month interest rates apply: (the rates are periodic rates so you do not need to adjust them at all - we do not need to multiply by 180/360 or anything like that)

Currency LendingRate BorrowingRate

Dollars 3.0% 3.25%

New Zealand dollar (NZ$) 4.0% 4.25%

Baylor Bank has the capacity to borrow either NZ$10 million or $5 million. If Baylor Bank's forecast if correct, what will its U.S. dollar profit be from speculation over the 6-month period?

What is the BEEX in six months for Baylor Bank? (in the form of $/NZ$)