Explore BrainMass

# Exchange Rate Calculations

Not what you're looking for? Search our solutions OR ask your own Custom question.

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Suppose the CFO of a German corporation with surplus cash flow has 1million Euros to invest. Suppose that interest rates on 1-year CD deposits in US banks are 2%, while rates on 1 year CD deposits denominated in Euros in German banks are currently 4.5%. Suppose further that the CFO expects that the (euro/\$) exchange rate will increase from 1 Euro per \$ to 1.1 euros per \$ during the coming year. Should the CFO invest in CD's denominated in dollars or in Euros?

https://brainmass.com/economics/exchange-rates/exchange-rate-calculations-19471

#### Solution Preview

This is a question of speculation.
Assume the CFO invest in dollars now, then 1 million Euro = 1 million USD
Then he invest the money as 1-year CD deposits ...

#### Solution Summary

The solution answers the question(s) below.

\$2.49