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arsen [322]
2 years ago
15

A currency speculator expects the spot rate of British Pounds (GBP) to change from $2.00 to $2.20 in 6-months. Assume the specul

ator has access to credit lines of USD 20,000,000 in the US and GBP 10,000,000 in UK. The annual borrowing and lending rates are 6 percent in US and 4 percent in UK. In order for the speculator to take advantage from the expected spot rate change in GBP, it should
Business
1 answer:
Vedmedyk [2.9K]2 years ago
5 0

Answer:

Borrow in dollars then at spot rate convert money to british pound. Invest in the pounds for half a year and convert back to dollars.

Explanation:

Access to credit = $20000000

We do a conversion to pounds

= 20000000/2

= £10000000

When this is invested for 6 months

10000000 x 1 +4% x6/12

= 10000000(1+0.04*0.5)

= 10000000x1.02

= 10200000

We then make a conversion back to dollars

10200000 x 2.2

= 22,440,000 dollars

Loan to be repaid

20000000(1+6%x6/12)

= 20000000 x 1 +0.06*0.5

= 20000000 x 1.03

= 20,600,000

Then arbitrage profit = 22440000 - 20600000

= 1840000

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Answer:

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Explanation:

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depreciable value = $80,000 + $6,000 - $23,031 = $62,969

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Explanation:

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Product or service profiling.

Explanation:

Product or service profiling is the term used to describe the linking of key product or service requirements to process capabilities.

Generally, most organizations and business owners use the product or service profiling strategy to enhance consistency through the identification of their key services or product line and as such are avail the opportunity to select the appropriate process, procedures and techniques to achieve their goals and objectives successfully.

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