If baylor banks forecast is correct what will its dollar


Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $.78 to $.80. The following annual interest rates apply:

Currency                                            Lending Rate                    Borrowing Rate

 Dollars                                                       7.10%                                      7.50%

New Zealand dollar (NZ$)                          6.80%                                      7.25%

Baylor Bank has the capacity to borrow $5 million. If Baylor Bank’s forecast is correct, what will its dollar profit be from speculation over the five-day period?

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