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Question 1 (3 points): Exchange rate risk Suppose that the treasurer of IBM has an extra cash reserve of $100,000,000 to invest for six months.

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Question 1 (3 points): Exchange rate risk Suppose that the treasurer of IBM has an extra cash reserve of $100,000,000 to invest for six months. The six-month interest rate is 8 percent per annum in the United States and 7 percent per annum in Germany. Currently, the spot exchange rate is 110 per dollar and the six-month forward exchange rate is 0.90 per dollar. The treasurer of IBM does not wish to bear any exchange risk. Where should he/she invest to maximize the return? Explain your

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