You are the fund manager of ABC Fund, based in New York. You noticed that the Egyptian
Question:
You are the fund manager of ABC Fund, based in New York. You noticed that the Egyptian T-Bills are offering one of the most competitive interest rates worldwide, and you perceived it as a lucrative investment opportunity. On 15th September 2022 your fund decided to invest in the Egyptian treasury bills that pays 15.2% annually and for this you transferred USD 1 million to Egypt. Money was converted in a bank which quoted a USD/EGP rate of 19.35/19.40.
On 15th September 2023, T-Bills matured and interest was recognized. USD/EGP on 15th September 2022 quotation was 30.90/30.95
Calculate in US$ terms the net profit / loss ABC Fund made on its investment in Egypt. (show all steps)
Now that the T-bills matured and ABC has their money in EGP, do you advice ABC fund to continue investing in the EGP at a T-bill rate of 25.5%, or convert their money into dollars and take it back home? Noting that the interest rate on USD deposits is 5.3%. (Justify your answer)
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts