You are a corporate treasurer for Esso Oil. The quoted rate on dollar-denominated euro commercial paper has just blipped down recently. Your firm can issue $10 million of 180-day euro commercial paper in the London markets at 3.45 percent. You can also invest the proceeds in the United States in comparable maturity negotiable dollar-denominated CDs,which are quoting 3.95 percent. Ignoring any transactions costs,how much money,if any,can Esso make by borrowing in the euro markets and investing in the United States? Is this a good deal or not? Should you expect it to last? Explain.

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The Answer of You are a corporate treasurer for Esso Oil. The quoted rate on dollar-denominated euro commercial paper has just blipped down recently. Your firm can issue $10 million of 180-day euro commercial paper in the London markets at 3.45 percent. You can also invest the proceeds in the United States in comparable maturity negotiable dollar-denominated CDs,which are quoting 3.95 percent. Ignoring any transactions costs,how much money,if any,can Esso make by borrowing in the euro markets and investing in the United States? Is this a good deal or not? Should you expect it to last? Explain.

You Are a Corporate Treasurer for Esso Oil