Given interest rates: Deposit rate: 0.40% in € & 1.0% in £ Borrow rate: 0.50% in € & 1.1% in £ Investment Plan: You use your own funds: $100 You can borrow additional funds either €250 or £200 Spot rates: EUR/USD = 1.2 & GBP/USD = 1.5 Expectation: USD is expected to depreciate by 2.5% against EUR in 1 month. USD is expected to appreciate by 1.5% against GBP in 1 month. Exchange rate in 1 month (1.8 points) EUR/USD = ______________ USD/EUR = ______________ GBP/USD = ______________ USD/GBP = ______________ GBP/EUR = _______________ EUR/GBP = _______________ Cross rates (2 point) GBP (appreciates/depreciates) against EUR by _______________ EUR (appreciates/depreciates) against GBP by _______________ Where to borrow? (1point) Borrow today Payoff after 1 month Payoff after 1 month in € € _________ __________________ ___________________________ £ _________ __________________ ___________________________ So, it is cheaper to borrow from _________. Where to invest? (1point) Investing today Withdraw after 1 month Withdraw after 1 month in € € _________ __________________ ___________________________ £ _________ __________________ ___________________________ So, it is better to invest in ___________. Today (2points) Change: $100 to __ ⟹ __________________ Borrow & Convert: Borrow ____________ with _________ borrowing rate and then change __ to __ ⟹ __________________ ⟹ __________________ Deposit: Deposit with __________________ Total deposit: __________________ After 1 month (2points) Receive (or withdraw): __________________ Repayment: Total payment in ____: ____________________________________ Total payment in ____: ____________________________________ After payment in ____: ____________________________________ Convert: __________________ Profit/Loss: __________________ (0.2 points)