Mue Demon Bank expects that the Mexican peso will depreciate against the dollar from its...
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Mue Demon Bank expects that the Mexican peso will depreciate against the dollar from its spot rate of $0.16 to $0.13 in 20 days. The following interbank lending and borrowing rates exist: Assume that Blue Demon Bank has a bocrowing capacity of elther $15 million or 75 million pesos in the interbank market, depending on which currency it wants to bocrow. Assume 360 days in year for your calculations. Do not round intermediate calculations. Round your answers to the nearest dollar: a. How could Blue Demon Bank attempt to capitalize on its expectations without using deposited funds? Estimate the pronts that could be generated from this strategy. Blue Demon Bank can capitalize on its expectations by bocrowing loan. The expected profic is 5 b. Assume all the preceding information with this exception: Blue Demon Bonk expects the peso to appreciate from its present spot rate of so.16 to s0.2 in. 2.8 dart. How could it attempt to copitalize on its expectations without using deposited funds7 Estimate the profits that could be generated from this strategy. Blue Demon Bank can capitasize on its expectations by borrowing , converting it to lending the ioan- The expected profit is s
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