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d. A bank borrows $1 million for 6-months at an annual interest rate of 6.5 percent. It invests the funds in a six-month
Posted: Sun Apr 10, 2022 8:42 am
by answerhappygod
- D A Bank Borrows 1 Million For 6 Months At An Annual Interest Rate Of 6 5 Percent It Invests The Funds In A Six Month 1 (59.01 KiB) Viewed 16 times
d. A bank borrows $1 million for 6-months at an annual interest rate of 6.5 percent. It invests the funds in a six-month Swedish krona AA-rated bond paying 7.5 percent per year. The current spot rate of US $ to Swedish Krona is $0.11/1 Kr. The six-month forward rate on the US $ to Swedish krona is quoted at $0.1110/1Kr. What is the net return earned on this investment, after 6 months, if the bank covers its foreign exchange exposure using the forward market?