Evaluation of Domestic and International Investments The treasurer of Enormo Corporation is always on the lookout for

Question:

Evaluation of Domestic and International Investments The treasurer of Enormo is always on the lookout for short-term, high-yielding investments. Six-month low-risk domestic investments currently yield 6 percent per annum. Two international investments of comparable risk are also being considered.
1. A six-month certificate of deposit issued by the Bank of England has a rate of 7 percent per annum. Spot and six-month forward exchange rates are $l .60 and $l .63, respectively ($/£).
2. A six-month certificate of deposit issued by the Bundesbank in Germany carries a rate of 5 percent per annum. Spot and six-month forward rates are $l .45 and $l .50, respectively ($/€).
Required
Assuming that Enormo has $ l ,000,000 to invest, cannot tolerate risk, and wants to maximize the number of dollars at the end of six months, analyze the three alternative investments and make a recommendation. Support your analysis with calculations.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...