Effective yield. Corlins plc has 1 million in cash available for 30 days. It can earn 1%
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Effective yield. Corlins plc has £1 million in cash available for 30 days. It can earn 1% on a 30-day investment in the United Kingdom. Alternatively, if it converts the pounds to South African rand, it can earn 1½% on a rand deposit. The spot rate of the rand is £0.09. The spot rate 30 days from now is expected to be £0.08. Should Corlins invest its cash in the United Kingdom or in South Africa? Explain your answer.
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