a. A student of the MBA50 course anticipates that the pound will depreciate from $1.80...
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a. A student of the MBA50 course anticipates that the pound will depreciate from $1.80 to $1.78 in one year. Since she has no money to invest asks for a loan from Zeta Bank. She can get either 1 million dollars or 1 million pounds for one year. She can borrow dollars at 6% or British pounds at 5% for one year. She can invest in a dollar deposit at 5% for one year or in a a British deposit at 4% for one year. Calculate the expected profit or loss (in dollars) if the MBA50 student follows a strategy to take advantage of the expected depreciation of the pound. (Mark 1.5) b. In 2021, the exchange rate between the Swedish Kronor (SK) and the $ dollar was Es/SK 0.07 $, while the exchange rate between the Indian Rupee (IND) and the $ dollar was equal to Eind/$ = 70.25 IND. Today the SK is equal to Eg/sk = 0.11 $ and the $ is equal to 76.25 IND. By what percentage did the cross exchange rate of the Indian Rupee in Swedish kronor (that is, the number of kronor that can be purchased with Indian Rupees) change over the last year? (Mark 1.5) = = =
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