You observe the following quoted money market rates:

Bid Ask

Spot exchange rate AUD1.185/USD AUD1.189/USD

95-day Forward exchange rate AUD1.341/USD AUD1.349/USD

95-day USD interest rate 5.57% p.a. 6.38% p.a. 95-day

AUD interest rate 7.71% p.a. 8.81% p.a.

What will your profit (in USD) be 95 days from now if you borrow USD3 million today and invest in Australia and then convert back to USD? In your calculations assume 360 days per year.

a.

-USD 361,605.85

b.

-USD 352,934.10

c.

-USD 272,802.68

d.

-USD322,300.31

e.

None of the options in this question.