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Calculate the potential profit that agri bank stands

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Reference no: EM132779818

Agri Bank (South Africa) took up a Eurocurrency loan of US$1 000 000 for 180 days at 2.50% per annum from Naomigroup, Washington, United States of America. The spot exchange rate ZAR/US$ = 17.27, the 180-day forward exchange rate ZAR/US$ = 17.33, and the Rand 180-day interest rate is 6% per annum.

Calculate the potential profit that Agri Bank stands to make if an arbitrage opportunity is used to maximise profits. (Assume a 360-day count and round off your answers to the nearest rand.

Reference no: EM132779818

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