You expect that the INR will depreciate against the dollar from its spot rate of

Question

You expect that the INR will depreciate against the dollar from its spot rate of $.0.15 to $.0.125 in 60 days. The following interbank lending and borrowing rates exist:

                                           Lending Rate             Borrowing Rate

      U.S. dollar                           1.0%                              2.5%

      INR                                     12.0%                            15.0%

How can you profit from the above given information. Estimate the profits that could be earned given your maximum borrowing limits are either $1,500 or INR 100,000?

Explanation / Answer

You expect that the INR will depreciate against the dollar from its spot rate of

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.