Any investors should focus on investing in the most profitable assets. Forward exchange rates eliminate currency risk to facilitate investment in foreign assets with higher yield rates (Salin, 2016). The paper compares investment in American and Brazilian 6-month Treasury bill
Short term lending to the US government is popularly regarded as the most secure investment because it is backed by the US's power to raise taxes. Short-term investments are mostly T-bills, whose maturity period varies from a few days to 1 year. In selling the treasury bills, the United States borrows money to pay for expenses and repay the par value at the end of the maturity period. Usually, governments sell T-bills at a discount such that the variation between the par value and the purchase price accounts for the investor's return (Slovenska, 2002). The current US 6 month interest rate is 0.10% (US Department of the Treasury, 2020). When purchasing US T-bills, worth the extra reserve cash, of $100,000,000, the buying price would be at a discount to allow for profits. In estimating the amount of profit, we calculate the purchase price and find the difference.
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