Green Banking Corp. can borrow $5 million at 6% annualized. It can use the proceeds to invest in Canadian dollars at 9% annualized over a six-day period. The Canadian dollar is worth $ 0.96 and is expected to be worth $ 0.95 in six days. Based on this information, should Green Banking Corp. borrow U.S. dollars and invest in Canadian dollars? What would be the gain or loss in U.S. dollars?
January 07, 2023
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Green Banking Corp. can borrow $5 million at 6% annualized. It can use the proceeds to invest in Canadian dollars at 9% annualized over a six-day period. The Canadian dollar is worth $ 0.96 and is expected to be worth $ 0.95 in six days. Based on this information, should Green Banking Corp. borrow U.S. dollars and invest in Canadian dollars? What would be the gain or loss in U.S. dollars?
Math
