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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?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91535824

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