Right now, you have $10,000 to invest over five years. The interest rate in the United States is 4% for invested Dollars. The interest rate in Europe is 5% for invested Euros. The interest rate in Japan is 6% for invested Yen. Assume that these interest rates are expected to remain unchanged over the next five years. The current and expected exchange rates are given in Table P5.16.

Which of the following options (if any) will maximize your wealth in US$ at the end of five years?
(a) Investing in the United States
(b) Investing in Europe
(c) Investing in Japan

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Expected Exchange Rates Five Years from Now Current Exchange Rates $1 = 0.735 Euro SI 97,50 Yen $1 = 0.880 Euro $1 = 1 10 Yen