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Blue Demon Bank expects that the Mexican peso will depreciate against the dollar from its spot rate of $0.16 to $0.12 in 20 days. The
Blue Demon Bank expects that the Mexican peso will depreciate against the dollar from its spot rate of $0.16 to $0.12 in 20 days. The following interbank lending and borrowing rates exist: to borrow. Assume 360 days in year for your calculations. Do not round intermediate calculations. Round your answers to the nearest dollar. a. How could Blue Demon Bank attempt to capitalize on its expectations without using deposited funds? Estimate the profits that could be generated from this strategy. Blue Demon Bank can capitalize on its expectations by borrowing , lending the , converting it to repaying the The expected profit is $ days. How could it attempt to capitalize on its expectations without using deposited funds? Blue Demon Bank can capitalize on its expectations by borrowing , lending the , converting it to repaying the loan. The expected profit is $
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