Question
Suppose that the huge Trading Company Glencore wants to invest $1 billion in a project (5 years). The annual interest rate in France is 8%
Suppose that the huge Trading Company Glencore wants to invest $1 billion in a project (5 years). The annual interest rate in France is 8% and 7% in Canada. Currently, the spot exchange rate is 1.01 per Canadian dollar and the one-year froward exchange rate is 0.99 per dollar. The treasurer of Glencore does not wish to bare any exchange risk. Where should Glencore invest to maximize the return?
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Financial Markets and Institutions
Authors: Anthony Saunders, Marcia Cornett
6th edition
9780077641849, 77861663, 77641841, 978-0077861667
