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.

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