ssume the following information regarding U.S. and European annualized interest rates:

Currency Lending Rate Borrowing Rate

U.S. Dollar ($) 6.73% 7.20%

Euro () 6.80% 7.28%

Trensor Bank can borrow either $20 million or 20 million. The current spot rate of the euro is $1.13. Furthermore, Trensor Bank expects the spot rate of the euro to be $1.10 in 90 days. What is Trensor Banks dollar profit from speculating if the spot rate of the euro is indeed $1.10 in 90 days?

Select one:

A. $579,845

B. $583,800

C. $588,200

D. $584,245

E. $980,245

Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $.48 to $.50. The following annual interest rates apply:

Currency Lending Rate Borrowing Rate

Dollars 7.10% 7.50%

New Zealand dollar (NZ$) 6.80% 7.25%

Baylor Bank has the capacity to borrow either NZ$10 million or $5 million. If Baylor Banks forecast if correct, what will its dollar profit be from speculation over the fiveday period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)?

Select one:

A. $521,325

B. $500,520

C. $104,262

D. $413,419

E. $208,044