A finance Manager of an American Company has US Dollars 30 million that he can invest for
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Question:
A finance Manager of an American Company has US Dollars 30 million that he can invest for one year. He is considering the possibility of either investing in the USA where a 1-year investment yields an interest rate of 8% or in Britain where a 1-year investment produces an interest rate of 12%. The current exchange rate is 0.74/US$. Calculate the 1-year forward exchange rate that will make the financial manager indifferent between investing in the USA or G. Britain.
Related Book For
Introduction To Derivatives And Risk Management
ISBN: 9781305104969
10th Edition
Authors: Don M. Chance, Robert Brooks
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