Kumick Co. expects that the pound will depreciate from $1.74 to $1.72 in one year....
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Kumick Co. expects that the pound will depreciate from $1.74 to $1.72 in one year. It has no money to invest, but it could borrow money to invest. A bank allows it. to borrow either 2 million dollars or 2 million pounds for one year. It can borrow dollars at 5.5 percent or British pounds at 4.5 percent for one year. It can invest in a risk-free dollar deposit at 4.5 percent for one year or a risk-free British deposit at 3.5 percent for one yeac. Determine the expected profit or loss (in dollars) if Kumick Co. pursues a strategy to capitalize on the expected depreciation of the pound. Do not round intermediate calculations. Round your answer to the nearest dollar, Enter your answer as a positive value. Kurnick Co. berrows and invest in a risk-free deposit to capitalize on the expected depreciation of the pound. The expected is 5
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