In which country would the treasurer want to invest company

Assignment Help Finance Basics

Reference no: EM13266421

The treasurer of a major U.S. firm has $12 million to invest for three months. The interest rate in the U.S. is 0.42 percent per month. The interest rate in the UK is 0.52 percent per month. The spot exchange rate is £0.70, and the three-month forward rate is £0.71. Ignoring transaction costs, in which country would the treasurer want to invest the company's funds? Why?

U.S.; earn an additional $47,211.16
U.S.; earn an additional $135,325.24
UK; earn an additional $9,418.02
UK; earn an additional $38,522.47
UK; earn an additional $121,510.67

Reference no: EM13266421

Questions Cloud

State what is the ph of a solution prepared : What is the pH of a solution prepared by dissolving 0.10 mol sodium acetate and 0.20 mol of acetic acid in enough water to make 2.0 L? Ka= 1.75 *10^-5

What will be the value of the equity : What will be the value of the equity if the firm repurchases all of its debt and raises the funds to do this by issuing equity? Assume that all of the assumptions in Modigliani and Miller's Proposition 1 hold.

Explain liquid has the higher surface tension and viscosity : one beaker contains pure water and the other beaker contains pure methanol at the same temperature. Which liquid has the higher surface tension and viscosity

Determine the minimum thickness of this coating : You are applying a anti reflecting coating to your plane. You don't want to be seen by radar which uses 'light' of wavelength 2cm. determine the minimum thickness of this coating

In which country would the treasurer want to invest company : The spot exchange rate is £0.70, and the three-month forward rate is £0.71. Ignoring transaction costs, in which country would the treasurer want to invest the company's funds? Why?

Explain what is the boiling point of chloroform in kelvins : Chloroform has Hvap=29.2 kj/mol and Svap=87.5j(K*mol). what is the boiling point of chloroform in Kelvins

What is the one-year risk-free rate in the u.s. : The one-year forward rate for the British pound is £0.6781 = $1. The spot rate is £0.6789 = $1. The interest rate on a risk-free asset in the UK is 4.6 percent. If interest rate parity exists, what is the one-year risk-free rate in the U.S.?

Define initial temperature of rod : Initial temperature of rod = 100 °C; mass of H2O in calorimeter =130 g; cH2O = 4.184 °C g . (Assume the calorimeter has negligible heat capacity).

Find the magnitude of the force on the tooth : A stainless-steel orthodontic wire is applied to a tooth that is out of line by 40 degrees. find the magnitude of the force on the tooth

User Account

All Pages