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3. A bank believes the New Zealand dollar will appreciate over the next 10 days...

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3. A bank believes the New Zealand dollar will appreciate over the next 10 days from $.48 to $.52. The following annual interest rates apply: Currency Lending Rate Borrowing Rate Dollars 7.1% 7.5% New Zealand dollar (NZ$) 7.2% 7.25% I The bank can borrow either NZ$10 million or $5 million, A. If the bank's forecast is correct, what will its dollar profit be from speculation over the 10-day period ? (3 points) B. What will be your loss if the NZ$ has depreciated into $.47. (1 point)

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