Assume the following information regarding U.S. and European annualized interest rates:

Trensor Bank can borrow either $20 million or €20 million. The current spot rate of the euro is $1.13. Furthermore, Trensor Bank expects the spot rate of the euro to be $1.10 in 90 days. What is Trensor Bank's dollar profit from speculating if the spot rate of the euro is indeed $1.10 in 90 days?

A)$579,845.
B)$583,800.
C)$588,200.
D)$584,245.
E)$980,245.

Question

Assume the following information regarding U.S. and European annualized interest rates:
​ 
Trensor Bank can borrow either $20 million or €20 million. The current spot rate of the euro is $1.13. Furthermore, Trensor Bank expects the spot rate of the euro to be $1.10 in 90 days. What is Trensor Bank's dollar profit from speculating if the spot rate of the euro is indeed $1.10 in 90 days?
​
A)$579,845. 
B)$583,800. 
C)$588,200. 
D)$584,245. 
E)$980,245.

Quizplus · Accepted Answer

The Answer of Assume the following information regarding U.S. and European annualized interest rates:
​ 
Trensor Bank can borrow either $20 million or €20 million. The current spot rate of the euro is $1.13. Furthermore, Trensor Bank expects the spot rate of the euro to be $1.10 in 90 days. What is Trensor Bank's dollar profit from speculating if the spot rate of the euro is indeed $1.10 in 90 days?
​
A)$579,845. 
B)$583,800. 
C)$588,200. 
D)$584,245. 
E)$980,245.

Assume the Following Information Regarding U