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?© BrainMass Inc. brainmass.com October 9, 2019, 4:00 pm ad1c9bdddf
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 ...
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