Domestic based cash management

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Reference no: EM132063142

1. Using the pure expectations approach to the determination of interest rates, calculate the expected (E) rate of interest of a one-year investment that will be available in 12 months' time (1i1), given the following data:

Current rate of return on a one-year-to-maturity (0i1) instrument is 7.75% per annum and for a two-year maturity (0i2) instrument is 8.25% per annum

1) 7.75% per annum

2) 8.25% per annum

3) 8.75% per annum

4) 9.25% per annum

2. International cash management is more complex than domestic based cash management because of:

A. The risk involved in currency fluctuation

B. The changing interest rates across countries

C. Varying time zones across countries

D. All of the above.

Reference no: EM132063142

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