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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% |
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