One-year interest rates are 7% in the U.S. and 4% in Canada. "Jack the carry trader" borrows C$3,000,000 to execute a carry trade. At the start, the exchange rate is $.892/CAD. After one year, the exchange rate is $.874/CAD
That's part of the question -- understanding which currency to borrow based on your belief about what direction the NZ$ is expected to move.
What is Jack’s USD profit or loss over the year?
B. When Jack starts this trade, he is hoping that the Canadian dollar doesn’t ______________.
C. When Jack starts this trade, he is hoping that the USD doesn’t_______________
D. What is the BEEX in one year? (place in terms of USD/CAD to 3 decimal places)