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Question
A French company wants to invest 20 million euros for three months. The company found that investing in a Thai money market account will give it a higher interest rate than domestic investments. Which of the following is true about this investment?
A. The investment is risk-free because money market investments are considered to be equivalent to bank deposits.
B. The investment is not risk-free because foreign currency movements in the intervening period can affect the profitability of the firm.
C. The investment is risk-free because such investments also lock foreign exchange rates for the duration of the investment.
D. The investment is not risk-free because money market instruments are considered to be the most speculative of all investments.
E. The investment is risk-free because the Thai money market is considered to be more stable and secure than other markets.
Answer
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