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Professor Dove is quite surprised to realize that she has a significant amount of cash on hand from the donut business that she is running
Professor Dove is quite surprised to realize that she has a significant amount of cash on hand from the donut business that she is running on the side. She plans on investing this extra cash reserve of $132,000,000 for a total of six months. The annual interest rate in the US is 8% and in Lichtenstein it is 6%. Currently the spot exchange rate is .85 euros per USD. The six-month forward rate is .88 euros per USD. Professor Dove is anti- exchange risk. Where should she invest in order to maximize the return? Please show how you arrived at your answer in order to get full credit. (10 points)
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