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Lee Iacocca has some money and wants to invest it in some government bonds US 1 year bonds pay 2 German Bunds pay 4 If

Lee Iacocca has some money and wants to invest it in some government bonds US 1 year bonds pay 2 German Bunds pay 4 If the interest rate parity holds where would Lee Iaccoca make more money in terms Should he invest in the US Bond or German Bund Assume no default risk German Bunds it earns a higher return Either no difference US Bonds it is safer none of the above Cannot determine

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