Subject 3: Exchange Rates and International Finance a. A student of the MBA course anticipates that the pound will depre

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Subject 3 Exchange Rates And International Finance A A Student Of The Mba Course Anticipates That The Pound Will Depre 1 (87.5 KiB) Viewed 24 times

Subject 3: Exchange Rates and International Finance a. A student of the MBA course anticipates that the pound will depreciate from $1.80 to $1.78 in one year. Since she has no money to invest asks for a loan from Zeta Bank. She can get either 1 million dollars or 1 million pounds for one year. She can borrow dollars at 6% or British pounds at 5% for one year. She can invest in a dollar deposit at 5% for one year or in a British deposit at 4% for one year. Calculate the expected profit or loss (in dollars) if the MBA50 student follows a strategy to take advantage of the expected depreciation of the pound. b. In 2021, the exchange rate between the Swedish Kronor (SK) and the $ dollar was E$/SK 0.07 $, while the exchange rate between the Indian Rupee (IND) and the $ dollar was equal to Eind/$ = 70.25 IND. Today the SK is equal to E$/sk = 0.11 $ and the $ is equal to 76.25 IND. By what percentage did the cross exchange rate of the Indian Rupee in Swedish kronor (that is, the number of kronor that can be purchased with Indian Rupees) change over the last year? Note: Round your answers up to the third decimal point. =