On June 5, Deborah, an American investor, decided to buy six-month Treasury bills. She found that the per-annum interest rate on six-month Treasury bills is 7.00% in New York and 11.00% in Frankfurt, Germany. Based on this information and assuming that tax costs and other transaction costs are negligible in the two countries, it is in Deborah's best interest to purchase six-month Treasury bills in , because it allows her to earn for the six months. On June 5, the spot rate for the euro was $0.820, and the selling price of the six-month forward euro was $0.822. At that time, Deborah chose to ignore this difference in exchange rates. In six months, however, the spot rate for the euro fell to $0.818 per euro. When Deborah converted the investment proceeds back into U. S. dollars, her actual return on investment was.
As a result of this transaction, Deborah realizes that there is great uncertainty about how many dollars she will receive when the Treasury bills mature. So, she decides to adjust her investment strategy to eliminate this uncertainty. What should Deborah's strategy be the next time she considers investing in Treasury bills?
i. Avoid investment in foreign institutions.
ii. Sell enough foreign currency on the forward market to match the anticipated proceeds from the investment.
iii. Exchange half of the anticipated proceeds of the investment for domestic currency.
Had Deborah used the covered interest arbitrage strategy on June 5, her net return on investment (relative to purchasing the U. S. Treasury bills) in German six-month Treasury bills would be . (Note: Assume that the cost of obtaining the cover is zero.)

steering wheels are always situated on the left side of the car.

always drive on the right side of the road.

white lines separate lanes of traffic traveling the same direction.

hashed or broken lines means you may change lanes when it is safe.

solid white lines mean stay in your lane.

yellow lines separate traffic moving in opposing directions.

hashed or broken yellow lines mean you can carefully pass, paying attention to oncoming traffic.

never cross a solid yellow line (or double yellow line).

when turning left at an intersection, pass in front of any cars that are turning left from the opposing direction (do not try to pass behind them).

use the left lane to pass other cars traveling your direction.

do not pass in the right lane unless absolutely necessary.

if you are driving in the far left hand lane and someone would like to pass you, move over to the right lane when it is safe to do so and allow them to pass.

you must always yield to pedestrians.

come to a complete stop whenever you see pedestrians trying to cross the street.

never pass a school bus if it has flashing red lights. wait until the lights have stopped.

be aware of bicyclists. often they share the road with cars and are supposed to also follow general traffic laws.

be particularly careful about driving in cities with bike lanes -- always check before turning that a bike is not coming.

it is mandatory to pull over or stop at an intersection to allow an emergency vehicle to pass you if you see one traveling with lights flashing and/or a siren running.

do not overuse your car horn. horns are used almost exclusively for emergency situations or for when you feel unsafe.

explanation:

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