Suppose that the treasurer of ibm has an extra cash reserve, Ask an Expert

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Suppose that the treasurer of IBM has an extra cash reserve of $100,000,000 to invest for six months. The six-month interest rate is 8 percent per annum in the United States and 7 percent per annum in Germany. Currently, the spot exchange rate is €1.01 per dollar and the six-month forward exchange rate is €0.99 per dollar. The treasurer of IBM does not wish to bear any exchange risk.

If he chooses to invest in German, what will be the value of the investment after 6 months in USD? (principal and interest)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92312968

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