Exchange rate, interest rate problem
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I am supposed to solve this: czech investor has 1 000 000 Czech crowns available. Exchange rate is 27 Czech crowns / 1€. Interest rate in a czech bank is 3% and 6% in a German bank. Investor expects, that exchange rate will be 30 Czech crowns / 1 € next year. Where is it more profitable for investor to save money?
My answer is that in Germany, because in Germany he will receive 1177777.778 Czech crowns and in Czech republic he will receive 1030000 Czech crowns.
economics
asked Dec 10 '18 at 15:50
PeterPeter
82
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add a comment |
$begingroup$
I am supposed to solve this: czech investor has 1 000 000 Czech crowns available. Exchange rate is 27 Czech crowns / 1€. Interest rate in a czech bank is 3% and 6% in a German bank. Investor expects, that exchange rate will be 30 Czech crowns / 1 € next year. Where is it more profitable for investor to save money?
My answer is that in Germany, because in Germany he will receive 1177777.778 Czech crowns and in Czech republic he will receive 1030000 Czech crowns.
economics
asked Dec 10 '18 at 15:50
PeterPeter
82
$endgroup$
$begingroup$
What have you tried? You are expected to compare just putting the money in a Czech bank with converting to euros, putting it in a German bank for a year, and converting back. Where are you stuck?
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– Ross Millikan
Dec 10 '18 at 15:53
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I edited the post with my answer and I am asking if it correct.
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– Peter
Dec 10 '18 at 15:54
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@RossMillikan Thanks, my calculations are 1 000 000*1,03 = 103 000 0 and 1 000 000 * 1/27 * 1,06 * 30 = 11 777 77, 778. I am not sure where I made the mistake.
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– Peter
Dec 10 '18 at 16:05
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No, I got it backwards. You are correct.
$endgroup$
– Ross Millikan
Dec 10 '18 at 16:07
add a comment |
$begingroup$
I am supposed to solve this: czech investor has 1 000 000 Czech crowns available. Exchange rate is 27 Czech crowns / 1€. Interest rate in a czech bank is 3% and 6% in a German bank. Investor expects, that exchange rate will be 30 Czech crowns / 1 € next year. Where is it more profitable for investor to save money?
My answer is that in Germany, because in Germany he will receive 1177777.778 Czech crowns and in Czech republic he will receive 1030000 Czech crowns.
economics
asked Dec 10 '18 at 15:50
PeterPeter
82
$endgroup$
I am supposed to solve this: czech investor has 1 000 000 Czech crowns available. Exchange rate is 27 Czech crowns / 1€. Interest rate in a czech bank is 3% and 6% in a German bank. Investor expects, that exchange rate will be 30 Czech crowns / 1 € next year. Where is it more profitable for investor to save money?
My answer is that in Germany, because in Germany he will receive 1177777.778 Czech crowns and in Czech republic he will receive 1030000 Czech crowns.
economics
economics
asked Dec 10 '18 at 15:50
PeterPeter
82
asked Dec 10 '18 at 15:50
PeterPeter
82
asked Dec 10 '18 at 15:50
PeterPeter
82
asked Dec 10 '18 at 15:50
PeterPeter
82
asked Dec 10 '18 at 15:50
PeterPeter
82
82
$begingroup$
What have you tried? You are expected to compare just putting the money in a Czech bank with converting to euros, putting it in a German bank for a year, and converting back. Where are you stuck?
$endgroup$
– Ross Millikan
Dec 10 '18 at 15:53
$begingroup$
I edited the post with my answer and I am asking if it correct.
$endgroup$
– Peter
Dec 10 '18 at 15:54
$begingroup$
@RossMillikan Thanks, my calculations are 1 000 000*1,03 = 103 000 0 and 1 000 000 * 1/27 * 1,06 * 30 = 11 777 77, 778. I am not sure where I made the mistake.
$endgroup$
– Peter
Dec 10 '18 at 16:05
$begingroup$
No, I got it backwards. You are correct.
$endgroup$
– Ross Millikan
Dec 10 '18 at 16:07
add a comment |
$begingroup$
What have you tried? You are expected to compare just putting the money in a Czech bank with converting to euros, putting it in a German bank for a year, and converting back. Where are you stuck?
$endgroup$
– Ross Millikan
Dec 10 '18 at 15:53
$begingroup$
I edited the post with my answer and I am asking if it correct.
$endgroup$
– Peter
Dec 10 '18 at 15:54
$begingroup$
@RossMillikan Thanks, my calculations are 1 000 000*1,03 = 103 000 0 and 1 000 000 * 1/27 * 1,06 * 30 = 11 777 77, 778. I am not sure where I made the mistake.
$endgroup$
– Peter
Dec 10 '18 at 16:05
$begingroup$
No, I got it backwards. You are correct.
$endgroup$
– Ross Millikan
Dec 10 '18 at 16:07
$begingroup$
What have you tried? You are expected to compare just putting the money in a Czech bank with converting to euros, putting it in a German bank for a year, and converting back. Where are you stuck?
$endgroup$
– Ross Millikan
Dec 10 '18 at 15:53
$begingroup$
What have you tried? You are expected to compare just putting the money in a Czech bank with converting to euros, putting it in a German bank for a year, and converting back. Where are you stuck?
$endgroup$
– Ross Millikan
Dec 10 '18 at 15:53
$begingroup$
I edited the post with my answer and I am asking if it correct.
$endgroup$
– Peter
Dec 10 '18 at 15:54
$begingroup$
I edited the post with my answer and I am asking if it correct.
$endgroup$
– Peter
Dec 10 '18 at 15:54
$begingroup$
@RossMillikan Thanks, my calculations are 1 000 000*1,03 = 103 000 0 and 1 000 000 * 1/27 * 1,06 * 30 = 11 777 77, 778. I am not sure where I made the mistake.
$endgroup$
– Peter
Dec 10 '18 at 16:05
$begingroup$
@RossMillikan Thanks, my calculations are 1 000 000*1,03 = 103 000 0 and 1 000 000 * 1/27 * 1,06 * 30 = 11 777 77, 778. I am not sure where I made the mistake.
$endgroup$
– Peter
Dec 10 '18 at 16:05
$begingroup$
No, I got it backwards. You are correct.
$endgroup$
– Ross Millikan
Dec 10 '18 at 16:07
$begingroup$
No, I got it backwards. You are correct.
$endgroup$
– Ross Millikan
Dec 10 '18 at 16:07
add a comment |
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$begingroup$
What have you tried? You are expected to compare just putting the money in a Czech bank with converting to euros, putting it in a German bank for a year, and converting back. Where are you stuck?
$endgroup$
– Ross Millikan
Dec 10 '18 at 15:53
$begingroup$
I edited the post with my answer and I am asking if it correct.
$endgroup$
– Peter
Dec 10 '18 at 15:54
$begingroup$
@RossMillikan Thanks, my calculations are 1 000 000*1,03 = 103 000 0 and 1 000 000 * 1/27 * 1,06 * 30 = 11 777 77, 778. I am not sure where I made the mistake.
$endgroup$
– Peter
Dec 10 '18 at 16:05
$begingroup$
No, I got it backwards. You are correct.
$endgroup$
– Ross Millikan
Dec 10 '18 at 16:07