Question
Suppose that you are the CFO of Google with an extra U.S. $20 Million to invest for one year. You are considering the purchase of
Suppose that you are the CFO of Google with an extra U.S. $20 Million to invest for one year. You are considering the purchase of U.S. T-bills that yield 4% per year. The spot exchange rate is $1.00 = 0.90, and the one-year forward rate is $1.00 = 0.95 . What must the interest rate in the Eurozone (on an investment of comparable risk) be before you are willing to consider investing there instead of the US?
| a. | 9.78% | |
| b. | 1.56% | |
| c. | 4.00% | |
| d. | 5.56% |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Management In Construction Contracting
Authors: Andrew Ross, Peter Williams
1st Edition
1405125063, 9781405125062
