Question 1. Some say that the TNK Bank is the greatest bank on earth. It expects that the Australian dollar (AUD) will appreciate against the U.S. dollar (USD) from its spot rate of $.64 to $.68 in 90 days. The following interbank lending and borrowing rates exist:

TNK Bank considers borrowing 2.5 million U.S. dollars in the interbank market and investing the funds in Australian dollar for 90 days. Estimate the profits (or losses) that could be earned from this strategy. Should TNK Bank pursue this strategy? Show necessary calculations and discuss.