Blackrock Hedge Fund can borrow 1 million (euros) at an annual rate of 5% or $1 million at an annual rate of 4.50%. Blackrock can invest euros in a 1-year certificate of deposit (C.D.) in the Eurozone and earn an annual interest rate of 4.5% or it can invest dollars in a 1-year C.D. in the U.S. and earn an annual interest rate of 4.00%. The current spot rate of the euro is $1.65/. Blackrock believes that the euro will depreciate significantly over the next year and expects the spot rate to be $1.50/ in one year. If Blackrock pursues a speculation strategy to capitalize on the expected depreciation of the euro, determine Blackrock's profit from this speculation if the spot rate of the euro is indeed $1.50/ in one year. *Note: Assume that Blackrock will start by borrowing either 1 million or $1 million.

Group of answer choices

None of these answers are correct

$94,000

$95,000

$141,000

$149,250

Flag this Question