As a cash manager of an MNC based in the United States that has extra dollars that can be invested for one year, where would you invest funds for the next year? Explain.

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As a cash manager of an MNC based in the United States that has extra dollars that can be invested for one year, where would you invest funds for the next year? Explain.

The Bloomberg website (www.bloomberg.com) provides interest rate data for many different foreign currencies over various maturities.

As a cash manager of an MNC based in the United States that has extra dollars that can be invested for one year, where would you invest funds for the next year? Explain.

Answer & Explanation (1)

Here is a tip:
Yield is the earnings generated on an investment in a particular period of time.

Explanation
The exchange rate of currencies from Country U's dollars to Country J's yen, Country A's dollars, and Country G's dollars are negative. As a cash manager of an MNC, it will be useful to invest the extra available amount in Country U because it is providing the highest yield, that is, 0.13%.

Verified Answer
In the current scenario, the cash manager would invest the extra funds in Country U as the yield in the currency of Country U is 0.13%. The current yield, 0.13%, is highest yield as compared to the other countries.

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