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U.S. Bancorp believes the New Zealand dollar (NZ$) will appreciate over the next 45 days from $0.72 to $0.76. The following annual interest rates apply:
U.S. Bancorp believes the New Zealand dollar (NZ$) will appreciate over the next 45 days from $0.72 to $0.76. The following annual interest rates apply: Currency Dollars New Zealand dollar (NZ$) Lending Rate 2.75% 2.85% Borrowing Rate 3.25% 3.30% U.S. Bancorp has the capacity to borrow either NZ$8 million or $8 million. If U.S. Bancorp's forecast is correct, how shall U.S. Bancorp implement its speculating trading activities and what will its dollar profit be from speculation over the 45-day period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)? (30/360 convention used for the interest calculation, i.e. assuming 360 days a year) U.S. Bancorp shall borrow NZ$8 million Doing so, U.S. Bancorp will realize the profit of $412,666.67 U.S. Bancorp shall borrow NZ$8 million Doing so, U.S. Bancorp will realize the , profit of $450.250.00 U.S. Bancorp shall borrow $8 million Doing so, U.S. Bancorp will realize the profit of $442,027.78. U.S. Bancorp shall borrow $8 million Doing so, U.S. Bancorp will realize the profit of $440,472.22
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