• • • 4. Your company has to make a US $1 million payment in three months' time. The dollars are available now. You decide to invest them for three months and you are given the following information - - - the US deposit rate is 8% per annum the sterling deposit rate is 10% per annum the spot exchange rate is $1.80/pound the three month forward rate is $1.78/pound Where should your company invest for better returns? a. b. Assuming that the US interest rate and the spot and forward rates remain as in the original question, where would you invest if the sterling deposit rate were 14% per annum?
• • • 4. Your company has to make a US $1 million payment in three months' time. The dollars are available now. You decide to invest them for three months and you are given the following information - - - the US deposit rate is 8% per annum the sterling deposit rate is 10% per annum the spot exchange rate is $1.80/pound the three month forward rate is $1.78/pound Where should your company invest for better returns? a. b. Assuming that the US interest rate and the spot and forward rates remain as in the original question, where would you invest if the sterling deposit rate were 14% per annum?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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