Ignoring transaction costs in which country would the


The treasurer of a major UK firm has £300 million to invest for 3 months. The deposit interest rate offer by the HSBC bank in the UK is 0.9027% (for 3 months). The same interest rate offered by Bendigo bank in Australia is 1.3561% (for 3 months). Spot exchange rate is A$0.59 (for £l), and the 3-month forward rate is A$0.61. Ignoring transaction costs, in which country would the treasurer want to invest the company’s funds? And why? [Does this have to calculate using IRP?]

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Financial Management: Ignoring transaction costs in which country would the
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