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The Brennon Group is a U.S. hedge fund that wants to benefit from the interest...

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Accounting

The Brennon Group is a U.S. hedge fund that wants to benefit from the interest rate differential between the euro area and Japan. A euro () costs $1.19 today, while a yen () costs $0.0086 today. The fund expects the exchange rates to still be $1.19 per euro and $0.0086 per yen in 5 months. Current annual interest rates are as follows: Currency Borrowing rate Lending rate Euro 7.3% 6.8% Yen 4.6% 4.1% The fund doesn't want to invest any of its own money, but can borrow 10,000,000 or 1,000,000,000. Assume there are 30 days in every month and 360 days per year. Ignore compounding when working with the interest rates. Attempt 5/10 for 8 pts. Part 1 What is the expected profit from the trade after 5 months (in $)? 0+ decimals

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