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Metro Inc. anticipates that the exchange rate of the Australian dollar ( A $ ) will appreciate from its current level of $ 0 .
Metro Inc. anticipates that the exchange rate of the Australian dollar $ will appreciate
from its current level of $ to $ in days. Metro Inc. can borrow $ million on a
shortterm basis from other banks. The current shortterm interest rates annualized in the
interbank market are as follows:
a Calculate Metro Inc.s speculative profit in $ and US$
b If City Corp. expects the Australian dollar exchange rate to be $ on day and
can borrow $ million, determine City Corp.s speculative profit in $ and US $
using the given interest rates.
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