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2. Suppose that the treasurer of IBM has an extra cash reserve of USD100,000,000 to invest...

2. Suppose that the treasurer of IBM has an extra cash reserve of USD100,000,000 to invest for six months. The annual interest rate is 4% in the United States and 3% in Germany. The spot exchange rate EUR/USD is 0.94 and the six-month forward exchange rate EUR/USD is 0.92. The treasurer of IBM does not wish to bear any exchange risk. Should he invest in US or in Germany to maximize the return? How much will his profit and return be? Please show all your work

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jeff jeffy answered 2 years ago
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