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as to decide between buying a one year CD ertificate of deposit) from a bank in the US or ne in France. The US CD, denominated in dollars, ays an interest rate of 3%, while French CD, enominated in Euro, pays an interest rate of 2%.

as to decide between buying a one year CD ertificate of deposit) from a bank in the US or ne in France. The US CD, denominated in dollars, ays an interest rate of 3%, while French CD, enominated in Euro, pays an interest rate of 2%.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Susan lives in the US and has $1000 to invest. She has to decide between buying a one year CD (certificate of deposit) from a bank in the US or one in France. The US CD, denominated in dollars, pays an interest rate of 3%, while French CD, denominated in Euro, pays an interest rate of 2%. The dollar-euro spot rate is 1.4 and the dollar- euro forward rate is 1.5. What should Susan do?
Transcribed Image Text:Susan lives in the US and has $1000 to invest. She has to decide between buying a one year CD (certificate of deposit) from a bank in the US or one in France. The US CD, denominated in dollars, pays an interest rate of 3%, while French CD, denominated in Euro, pays an interest rate of 2%. The dollar-euro spot rate is 1.4 and the dollar- euro forward rate is 1.5. What should Susan do?
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