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Question 5 (20 marks) Suppose that the treasurer of IFM (a US company) has an extra cash reserve of $100,000,000 to invest for six months.

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Question 5 (20 marks) Suppose that the treasurer of IFM (a US company) has an extra cash reserve of $100,000,000 to invest for six months. The interest rate is 8 percent per annum in the United States and 7 percent per annum in Germany. Currently, the spot exchange rate is 1.01 per dollar and the six-month forward exchange rate is 0.99 per dollar. The treasurer of IFM does not wish to bear any exchange risk. State clearly where he/she should invest to maximize the return

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