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You expect that the Mexican peso will depreciate against the Australian dollar from its spot rate of A$0.2567 to A$0.2268 in one year. The following
You expect that the Mexican peso willdepreciateagainst the Australian dollar from its spot rate of A$0.2567 to A$0.2268 in one year. The following interbank lending and borrowing rates exist:
Lending RateBorrowing Rate
Australian dollar7.77%8.88%
Mexican peso 8.47%9.13%
You havea borrowing capacity of either 1 million Australian dollars or 4 million Mexican pesos in the interbank market. Without using your own deposited fund, estimate the profits in percentage. (enter 2 decimal places number with on sign or symbol)
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