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The investment proceeds from the initial investment is £ (Round to two decimal places.)

The investment proceeds from the initial investment is £ (Round to two decimal places.)

Essentials Of Investments
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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Clayton Moore's Money Fund. Clayton Moore is the manager of an intemational money market fund managed out of London. Unlike many money funds that guarantee their investors a near risk-free investment with variable interest earnings, Clayton Moore's fund is a very aggressive fund that searches out relatively high-interest earnings around the globe, but at some risk. The fund is pound-denominated. Clayton is currently evaluating a rather interesting opportunity in Malaysia. Since the Asian Crisis of 1997, the Malaysian government enforced a number of currency and capital restrictions to protect and preserve the value of the Malaysian ringgit. The ringgit was fixed to the U.S. dollar at RM3.80/$ for seven years. In 2005, the Malaysian govemment allowed the currency to float against several major currencies. The current spot rate today is RM3.13486/S. Local currency time deposits of 180-day maturities are earning 8.897% per annum. The London eurocurrency market for pounds is yielding 4.201% per annum on similar 180-day maturities. The current spot rate on the British pound is $1.5823/£, and the 180-day forward rate is $1.5564/£. The initial investment is £1,100,000.00. The investment proceeds from the Initlal investment is £. (Round to two decimal places.)
Transcribed Image Text:Clayton Moore's Money Fund. Clayton Moore is the manager of an intemational money market fund managed out of London. Unlike many money funds that guarantee their investors a near risk-free investment with variable interest earnings, Clayton Moore's fund is a very aggressive fund that searches out relatively high-interest earnings around the globe, but at some risk. The fund is pound-denominated. Clayton is currently evaluating a rather interesting opportunity in Malaysia. Since the Asian Crisis of 1997, the Malaysian government enforced a number of currency and capital restrictions to protect and preserve the value of the Malaysian ringgit. The ringgit was fixed to the U.S. dollar at RM3.80/$ for seven years. In 2005, the Malaysian govemment allowed the currency to float against several major currencies. The current spot rate today is RM3.13486/S. Local currency time deposits of 180-day maturities are earning 8.897% per annum. The London eurocurrency market for pounds is yielding 4.201% per annum on similar 180-day maturities. The current spot rate on the British pound is $1.5823/£, and the 180-day forward rate is $1.5564/£. The initial investment is £1,100,000.00. The investment proceeds from the Initlal investment is £. (Round to two decimal places.)
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