Question

The treasurer of a major U.S. firm has $32 million to invest for three months. The...

The treasurer of a major U.S. firm has $32 million to invest for three months. The interest rate in the United States is .45 percent per month. The interest rate in Great Britain is 0.5 percent per month. The spot exchange rate is £0.56, and the three-month forward rate is £0.61. Ignore transaction costs.

If the treasurer invested the company's funds in the U.S., what would the value be in three months?
If the treasurer invested the company's funds in Great Britain, what would the value be in three months?

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