A us investor has 10 million to invest in interest-bearing, Ask an Expert

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A US investor has $10 million to invest in interest-bearing securities for one year. He can invest in US dollars at 2 ¾ % p.a. or in pounds sterling at 4 ½ % p.a. The current spot rate (American terms) is 1.8172 dollars per pound.

At what spot rate of exchange a year from now would he break even? i.e. at what spot rate a year from now would his final position in sterling be equal to his final position in dollars?

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Financial Management, Finance

Category:- Financial Management
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