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Suppose that the treasurer of Amazon has an extra cash reserve of $250,000,000 to invest for six months. The six-month interest rate is 6 percent
Suppose that the treasurer of Amazon has an extra cash reserve of $250,000,000 to invest for six months. The six-month interest rate is 6 percent per annum in the United States and 5 percent per annum in Germany. Currently, the spot exchange rate is 1.02 per dollar and the six-month forward exchange rate is 0.99 per dollar. The treasurer of Amazon does not wish to bear any exchange risk. Where should he or she invest to maximize the return?
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