Question

Assume the following information regarding U.S. and Canadian annualized interest rates:Currency lending rate borrowing rateus dollar 5.89% 6.35%candian dollar 5.60% 6.00% Piggy Bank can borrow either $20 million or C$30 million. Furthermore, Piggy Bank expects the spot rate of the Canadian dollar to be $0.82 in 60 days (the current spot rate is $0.80). What is Malone Bank's profit or loss from speculation if the spot rate 60 days from now is indeed $0.78?

Answer 1

$601,600

Step-by-step explanation:

$601,600 is Malone Bank's profit or loss from speculation if the spot rate 60 days from now is indeed $0.78.

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