Assume the following information. · Interest rate on borrowed euros is 5 percent annualized.
· Interest rate on dollars loaned out is 6 percent annualized.
· Spot rate is 1.10 euros per dollar (one euro = $0.909).
· Expected spot rate in five days is 1.15 euros per dollar.
· Fabrizio Bank can borrow 10 million euros.
If Fabrizio Bank attempts to capitalize on the above information, its profit over the five-day period is
A)2,653,597.22 euros.
B)455,266.81 euros.
C)452,426.04 euros.
D)None of these are correct.

Question

Assume the following information. ​· Interest rate on borrowed euros is 5 percent annualized.
· Interest rate on dollars loaned out is 6 percent annualized.
· Spot rate is 1.10 euros per dollar (one euro = $0.909).
· Expected spot rate in five days is 1.15 euros per dollar.
· Fabrizio Bank can borrow 10 million euros.
If Fabrizio Bank attempts to capitalize on the above information, its profit over the five-day period is
A)2,653,597.22 euros.
B)455,266.81 euros.
C)452,426.04 euros.
D)None of these are correct.

Quizplus · Accepted Answer

The Answer of Assume the following information. ​· Interest rate on borrowed euros is 5 percent annualized.
· Interest rate on dollars loaned out is 6 percent annualized.
· Spot rate is 1.10 euros per dollar (one euro = $0.909).
· Expected spot rate in five days is 1.15 euros per dollar.
· Fabrizio Bank can borrow 10 million euros.
If Fabrizio Bank attempts to capitalize on the above information, its profit over the five-day period is
A)2,653,597.22 euros.
B)455,266.81 euros.
C)452,426.04 euros.
D)None of these are correct.

Assume the Following Information