Investments, tenth edition

Interest Rates 

90-Day Cash Equivalents

Japanese government

7.6%

Swiss government

8.6%

Exchange Rates 

Currency Units per U.S. Dollar

Spot

90-Day Forward

Japanese yen

133.05

133.47

Swiss franc

1.5260

1.5348

 

 

 

4.  After studying Iris Hamson’s credit analysis, George Davies is considering whether he can 

increase the holding-period return on Yucatan Resort’s excess cash holdings (which are held in 

pesos) by investing those cash holdings in the Mexican bond market. Although Davies would 

be investing in a peso-denominated bond, the investment goal is to achieve the highest holding-

period return, measured in U.S. dollars, on the investment. 

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  Futures, Swaps, and Risk Management 

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 Davies finds the higher yield on the Mexican 1-year bond, which is considered to be free 

of credit risk, to be attractive, but he is concerned that depreciation of the peso will reduce the 

holding-period return, measured in U.S. dollars. Hamson has prepared the following selected 

financial data to help Davies make the decision: