Illustrate what are key tools the fed plans use to achieve


Illustrate what are those key objectives also Illustrate what are the key tools the Fed plans to use to achieve those objectives?

Calculation of exchange rate.

Suppose the CFO of a German corporation with surplus cash flow has 1 million Euros to invest. Suppose which interest rates on 1-yr CD deposits in U.S. banks are 2%, while rates on 1 yr CD deposits denominated in Euros in German banks are currently 4.5%. Suppose further which the CFO expects which the (euro/$) exchange rate will increase from 1 euro per $ to 1.1 Euros per $ during the coming yr. Should the CFO invest in CD's denominated in dollars or in Euros? Explain how your work to substantiate your response as credible.

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Business Economics: Illustrate what are key tools the fed plans use to achieve
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