Question
2. Suppose that the treasurer of IBM has an extra cash reserve of USD100,000,000 to invest for six months. The annual interest rate is 4%
2. Suppose that the treasurer of IBM has an extra cash reserve of USD100,000,000 to invest for six months. The annual interest rate is 4% in the United States and 3% in Germany. The spot exchange rate EUR/USD is 0.94 and the six-month forward exchange rate EUR/USD is 0.92. The treasurer of IBM does not wish to bear any exchange risk. Should he invest in US or in Germany to maximize the return? How much will his prot and return be? Please show all your work
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Solutions Manual To Accompany Fundamentals Of Corporate Finance
Authors: Richard Brealey
6th Edition
0077265963, 978-0077265960
