Suppose that Denver Financial co. expects the exchange rate of the New Zealand dollar (NZ$)...
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Suppose that Denver Financial co. expects the exchange rate of the New Zealand dollar (NZ$) to appreciate from its current level or 0.5 to 0.52 in 30 days. Denver Financial seeks to capitalize on this potential opportunity Suppose that Denver Financial begins by borrowing $30,000,000 and converting it to New Zealand dollars (28) The following table shows the short-term interest rates (annualited) in the Interback market. Currency U.S. Dollars Lending Rate Borrowing rate (Adjusted for 30-day period) (Adjusted for 30-day period) 6.72 7.20% 6.46% 6.964 New Zealand Dollar (NZ$) Suppose that Denver Financial takes its NZ$60,000,000.00 and invests It. Denver Financial can earn a 0.0054 percent return after 30-days. Hint: Assume 360 days in a year At the end of 30 days, Denver Financial will have a total of NZ (New Zealand dollars) from the investment
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