Question $23$

$5$ pts

DK Investment Co is a US firm that executes a carry trade in which it borrow euros $($where interest rates are presently low$)$ and invests in British pounds $($where interest rates are presently high$).$ DK Investment uses $$100,000$ of its own funds and borrow an additional euro $600,000.$ It will pay $0\mathrm{.}5\%$ on its euro borrowed for the next month and will earn $1\mathrm{.}0\%$ per month on funds invested in UK $($British pounds$).$ Assume the euro spot rate is $$1\mathrm{.}2/$euro and the BP rate is $$\frac{1\mathrm{.}9}{B}P$ and after one month the FX rates will be the same. What will be DK Investment Net US $ profit from this carry trade investment? For the calculation of cross FX rate, use two decimal point after rounding up $($e$.$g$,1\mathrm{.}1101$ is $1\mathrm{.}11)$

around $$4,800$

around $$4,600$

around $$4,200$

around $$4,400$