Suppose that you are the treasurer of IBM with an extra $1,000,000 to invest for six months. You are considering the purchase of U.S. T-bills that yield 1.810 percent over a six-month period. The spot exchange rate is $1.00 = 100, and the six-month forward rate is $1.00 = 110. Alternatively, the six-month interest rate in Japan on an investment of comparable risk is 13 percent. What is your strategy to maximize guaranteed dollar proceeds in six months?

Multiple Choice

Take $1mn and invest in U.S. T-bills.

Take $1mn, convert them into yen at the spot rate, invest in Japan, and repatriate your yen earnings back into dollars at the spot rate prevailing in six months.

Take $1mn, convert them into yen at the spot rate, invest in Japan, and hedge with a short position on the forward contract.

Take $1mn, convert them into yen at the forward rate, invest in Japan, and hedge with a short position on the spot contract.

(I want a solution quickly, thank you)