Remember to enjoy the collaborative process of this exercise

Remember to enjoy the collaborative process of this exercise
which is intended to enhance your understanding of the
course material much more than precisely getting the final
answer. For ease of reference, you can access the 8-step
guideline from the mini-lecture on Speculation on
Expected Foreign Exchange Rates.
1. There is enormous pressure for China to revalue its
currency which is currently pegged at CPY8.3/$1. In 360
days, analysts expect the rate to change to CPY7.8/$1. If you
believe this forecast and want to take advantage of it, what
could you do to make a profit using the following data?
Currency
Lending
Rate
Borrowing
Rate
Amount that can be
borrowed
Yuan 8% 9% 10 million
$ 5% 6% 1 million
2. Michael Kors expects the NZ$ to depreciate from its present level
of $0.50 (in the future, this means the same as US$0.50/NZ$1) to
$0.48 in 30 days. Using the interest rates below, what is its expected
profit if it does speculate and is correct?
Curre
ncy
Lending
Rate
Borrowing
Rate
Amount that can be
borrowed
NZ$ 6.48% 6.96% 40 million
$ 6.72% 7.20% 20 million