Net Return on Investment Assignment | Homework For You
Wells Fargo issued $200million of one-year CDs in the U.S. at a rate of 4.25%. It invested part of this money, $50 million, in the purchase of a one-year bond issued by a U.S. firm at an annual rate of 6.25%. The remaining $150 million was invested in one-year Laotian bonds paying an annual interest of rate of 11.25%.
The exchange rate at the time of the transaction was Laotian kip (K) 8500/$1.
a. What will be the net return on this $200 million investment if the exchange rate does not change?
b. What will be the net return on this $200 million investment if the exchange rate changes to K 8100/$1?
c. What will be the net return on this $200 million investment if the exchange rate changes to K 9100/$1? Get Economics homework help today