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Linda_us
Linda_us, Finance, Accounts & Homework Tutor
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ASSUME THE FOLLOWING INFORMATION REGARDING U.S. AND EUROPEAN

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ASSUME THE FOLLOWING INFORMATION REGARDING U.S. AND EUROPEAN ANNUALIZED INTEREST RATES:

CURRENCY LENDING RATE BORROWING RATE

U.S. DOLLAR ($) 6.73% 7.20%
EURO (E) 6.80 7.28%

TENSOR BANK CAN BORROW EITHER $20MILLION OR E20 MILLILION. THE CURRENT SPOT RATE OF THE EURO IS $1.13. FURTHERMORE, TENSOR BANK EXPECTS THE SPOT RATE OF THE EURO TO BE $1.10 IN 90 DAYS. WHAT IS TENSOR BANK'S PROFIT FROM SPECULATING IF THE SPOT RATE OF THE EURO IS INDEED $1.10 IN 90 DAYS?
HiCustomerbr />
Can you re-verify the lending and Borrowing rate.

USD Lending rate 6.73% Borrowing Rate 7.20%
EURO Lending Rate 6.80% Borrowing Rate 7.28%

It seem they should be reversed as bank lending rate should be more than borrowing rate. If you want i can slove the question with given information.

.

Regards

Linda

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