What annualized rate of return could you lock

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Problem - In 4 months, you expect to receive $197561.43 from your customers, which you will want to invest for1 so that you can pay suppliers in 5 months. You want to invest in fixed income, but you do not know what rate of return you can achieve in 4 months. You can observe that the current rates of return for 4 months, and for 5 months are 4.15% and 6.73%, respectively. You decide to use an over the counter instrument to lock in a rate of return. What annualized rate of return could you lock in for the investment in 4 months time?

Reference no: EM132980907

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