Question $16$

$3\mathrm{.}33$ pts

A currency speculator expects the spot rate of BP to change from USD $2\mathrm{.}00$ to USD $1\mathrm{.}90$ in one year. Assume the speculator has access to credit lines of USD $10,000,000$ in the US and BP $5,000,000$ in UK$.$ The annual borrowing and lending rates are $2\%$ in US and $3\%$ in UK$.$ If his forecast is correct, the speculator's expected profit at the end of the year will be:

USD $436,840$

BP $436,840$

USD $218,420$

BP $218,420$