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. 

Answer rating: 100% (QA)

To determine the potential profit that Agri Bank could make using an arbitrage opportunity we need t... View the full answer