elp Center 2 Question 3 O out of 24 points Baylor Bank believes the New Zealand dollar (NZD) will appreciate over the next one year from USDO.50/NZD to USD0.80/NZD. The following annual interest rates apply: Currency Lending Rate Borrowing Rate U.S. Dollars(USD) 4.00% 5.00% New Zealand dollar (NZD) 4.50% 5.5096 Baylor Bank has the capacity to borrow either NZD10 million or USD5 million. If Baylor Bank's forecast is correct, what will its USD profit be from speculation over the one period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)? 1) Which currency should be borrowed? Why? 2) Describe 3 transactions at Time - 0 a) b) c) 3) Describe 3 transactions at Time - 1 a) b) 4) Calculate Profit/Loss in USD. Selected Answer: 1) NZD should be borrowed. Because NZD's value will appreciate over the next one year. 2) Response Feedback: [None Given] out of 12 points Question 4 Consider two foreign exchange quotations between U.S. dollar (USD) and Japanese yen UPY: USD 0.0125/JPY and JPY 80/USD