Sapling independent is a small bank located in hong kong. sapling independent is interested in increasing the number of mortgages it writes, but it is constrained by how many deposits it has.
it has decided to borrow 12,000,000 euros from a large german bank for one year. the german bank is going to charge sapling independent an interest rate 1.500% per year.
the german bank insists on being repaid in euros.
after sapling independent borrows the money, it is going to have to convert the money into hong kong dollars at an exchange rate of 13.000 hk dollars/euro.
then sapling independent is going to lend all the money at an interest rate of 6.000% per year. at the end of one year, all the money that sapling independent lent will be repaid, plus interest.
finally, at the end of one year, sapling learning is going to have to repay its loan to the german bank in euros. at the end of the year, the exchange rate is 11.500 hk dollars/euro.
what is sapling independent\'s profit from this series of transactions in hong kong dollars?
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Sapling independent is a small bank located in hong kong. sapling independent is interested in incre...
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