Investing in a currency portfolio. Why would a firm consider investing in a portfolio of foreign currencies instead of just a single foreign currency?

14 Interest rate parity. Trellis Ltd has determined that the interest rate on euros is 16% while the UK interest rate is 11% for one-year Treasury bills. The oneyear forward rate of the euro has a discount of 7%.

Does interest rate parity exist? Can Trellis achieve a higher effective yield by using covered interest arbitrage than by investing in UK Treasury bills? Explain.