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5. Commerzbank in seeking to invest $100 million short term. It has the choice between buying Euro- CP yielding 6.34 percent annually and a U.S.
5. Commerzbank in seeking to invest $100 million short term. It has the choice between buying Euro- CP yielding 6.34 percent annually and a U.S. bank deposit yielding 6.54 percent annually, both maturing in 150 days. The Euro-CP yield is calculated on a 360-day year, whereas the U.S. bank deposit yield is calculated on a 365-day year. a. How much Euro-CP in terms of face value can Commerzbank's $100 million buy? (5 marks) b. Assuming that all else is equal, which is Commerzbank's preferred investment? Explain
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