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Given the information: Interest rate in US (Rh): 3.5% Interest rate in Euro zone (Rh): 7.5% Line of credit in US: USD 10,000,000 Line of
Given the information: Interest rate in US (Rh): 3.5% Interest rate in Euro zone (Rh): 7.5% Line of credit in US: USD 10,000,000 Line of credit in in Euro zone: EUR 8,000,000 The spot rate of EUR, now (SR0): $1.25 Suppose your forecast tells you that the spot rate of EUR one year later (SR1) will be $1.20. Then, your recommended investment strategy should earn a net profit of
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