New Zealand 6.8% BOA has the capacity to borrow $5 million from Chase Bank. If BOA forecasting is correct, what will be its US$ profit from this FX speculation over the 90 days period? O around $0.26 million

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter9: Forecasting Exchange Rates
Section: Chapter Questions
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BOA (US Bank) believes that New Zealand dollar will appreciate over the next 90 days from US$0,48/NZ$ to US$0.50/NZS. The following
information is available.
Country
Interest Rate (annual)
7.20%
New Zealand
6.8%
BOA has the capacity to borrow $5 million from Chase Bank. If BOA forecasting is correct, what will be its US$ profit from this FX
speculation over the 90 days period?
US
O around $0.26 million
O around $0.21 million
O around $5.10 million.
O around $5.30 million
Transcribed Image Text:BOA (US Bank) believes that New Zealand dollar will appreciate over the next 90 days from US$0,48/NZ$ to US$0.50/NZS. The following information is available. Country Interest Rate (annual) 7.20% New Zealand 6.8% BOA has the capacity to borrow $5 million from Chase Bank. If BOA forecasting is correct, what will be its US$ profit from this FX speculation over the 90 days period? US O around $0.26 million O around $0.21 million O around $5.10 million. O around $5.30 million
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