Question
Nanotronics is neither a banker nor an FX (foreign exchange) dealer. It takes the rates and figures in the market as they are given to
Nanotronics is neither a banker nor an FX (foreign exchange) dealer. It takes the rates and figures in the market as they are given to it.
Spot rate: Buy rate MXN 19.235/USD;
Spot rate: Sell rate MXN 19.385/USD
Nine-month forward rate: Buy rate MXN 20.115/USD
Nine-month forward rate: Sell rate MXN 20.265/USD
U.S commercial interest rate (borrowing) 4.5 percent
U.S commercial interest rate (lending) 1.0 percent
Mexico commercial interest rate (borrowing or lending) 6.5 percent
Please guide Nanotronics where to invest.
. What happens if Nanotronics relaxes its desire to stay riskless, calculate a risk situation with the above data offset by a risk investment and a non-risk investment?
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