Recommending a Short Term Foreign Investment [WLOs: 2, 3] [CLOs: 1, 4, 6] Suppose the treasurer of your company finds out you are enrolled in BUS450 International Finance. Knowing this, your treasurer...

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Recommending a Short Term Foreign Investment [WLOs: 2, 3] [CLOs: 1, 4, 6]


Suppose the treasurer of your company finds out you are enrolled in BUS450 International Finance. Knowing this, your treasurer seeks your advice. Your company has extra cash reserves of $100,000,000 and needs to invest it for 6 months. The treasurer has heard that investing in foreign currencies for the short term might have a higher yield when compared to a short term United States investment. Research the following:




  • The US 6 month interest rate

  • The 6 month interest rate of a country of your choosing

  • The spot exchange rate of your selected currency relative to the US Dollar

  • The six-month forward exchange rate per the US Dollar.


Prepare a proposal to your treasurer that outlines your research and recommendation. Provide calculations where necessary to support your recommendation. Summarize your findings in a three- to five- page paper, not including title and references pages. Be sure to properly cite your resources using APA style.





The Week Three Assignment



  • Must be three to five double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center.

  • Must include a title page with the following:

    • Title of paper

    • Student’s name

    • Course name and number




    • Instructor’s name

    • Date submitted


  • Must begin with an introductory paragraph that has a succinct thesis statement.

  • Must address the topic of the paper with critical thought.

  • Must end with a conclusion that reaffirms your thesis.

  • Must use at least three scholarly sources.

  • Must document all sources in APA style, as outlined in the Ashford Writing Center.

  • Must include a separate references page, formatted according to APA style as outlined in the Ashford Writing Center.

Answered Same DayNov 02, 2021

Answer To: Recommending a Short Term Foreign Investment [WLOs: 2, 3] [CLOs: 1, 4, 6] Suppose the treasurer of...

Shakeel answered on Nov 04 2021
126 Votes
Recommendation report on short term foreign investment
Submitted to
Instructor’s Name
Submitted by
Student’s Name
Course Name________________________
Course No__________________________
Introduction
Foreign exchange investment is quit innovative and have been preferred over other investment avenues due to high returns although it also poses high risk Gaucan (2010). With the change in geopolitical orders of the world, the economies of some major countries have seen dramatic changes over past decade. Protectionist policy of US, Economic expansion of China, trade growth of Central and South Asian countries, stagnated economies of Europe and Japan and high growth trajectory of East Asian and Latin American countries are some of the recent significant changes in global economy. Trade war between US and China, weak role of WTO, formation of bilateral and multilateral trade forums and agreements have changes the global trade significantly and of course, its impact can be observed in exchange rate between currencies.
In this paper, it is tried to find out the feasibility of foreign currency investment for a short term. A set amount has to be invested for six months in a particular foreign currency. Therefore, it is interesting to know how a selected foreign currency would perform in next six months and how much investor can expect to gain on such foreign currency investment. Some basic theories on foreign exchange are applied to find the answer.
Selection of foreign currency for investment
Investment is foreign currency needs proper selection of currencies pair. Here the base currency is US Dollar and the amount of investment is $100,000,000. Investment period is 6 months. There are many currencies where investment can be made. It may be Euro, Pound, Sterling, Yen, Yuan, INR and so on. For the selection of a particular currency, there are some under variables needs to be analyzed. The ultimate goal of any investment is to make profit. Therefore, the strategy would be either purchase the foreign currency cheaper and sell costlier or selling costlier and later buy cheap. As far as the gap between current exchange rate and expected six...
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