Assume the following information regarding U.S. and European annualized interest
rates:
Currency Lending Rate Borrowing Rate
U.S. Dollar ($) 6.73% 7.20%
Euro (€) 6.80% 7.28%
Trensor Bank can borrow either $20 million or €20 million. The current spot rate of the euro is $1.13.
Furthermore, Trensor Bank expects the spot rate of the euro to be $1.10 in 90 days. What is Trensor Bank's
dollar profit from speculating if the spot rate of the euro is indeed $1.10 in 90 days?
a. $579,845.
b. $583,800.
c. $588,200.
d. $584,245.
e. $980,245.