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?(5marks)

b.Assuming that all else is equal, which is Commerzbank's preferred investment? Explain.(5 marks)