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Consider a German firm that wishes to invest euro funds for a period of one year. The firm has a choice of investing in a
Consider a German firm that wishes to invest euro funds for a period of one year. The firm has a choice of investing in a euro bond with one year to maturity, paying an interest rate of 2.25 percent. The current exchange rate is 1.12 euro per U.S. dollar, and the one-year forward exchange rate is 1.25 euro per U.S. dollar. Should the German firm invest in euro bonds or in U.S. dollar bonds?
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Guide To Finance Theory And Application Portfolio Mathematics
Authors: Professional Risk Managers' International Association (PRMIA)
1st Edition
0071731814
