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Part A You believe the Naira will appreciate over the next 6 months from N80.00/ to N72.00/. The following annual interest rates apply: Currency Deposit

Part A

You believe the Naira will appreciate over the next 6 months from N80.00/ to N72.00/. The following annual interest rates apply:

Currency Deposit Rate Borrowing Rate

Naira 18. 0% 20.0%

Cedi 20.0% 25.0%

i. If you have the capacity to borrow either N80 million or 1million, would you borrow naira to invest in cedis, or borrow cedis to invest in naira?

ii. In making a choice after your analysis in part (i) above, what additional factors would you take into consideration, and why?

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