1) On April 29, 2014 a U.S. based investor bought a U.K. government 5 year zerocoupon bond...
Question:
1) On April 29, 2014 a U.S. based investor bought a U.K. government 5 year zerocoupon bond with the principal of GBP 1,000. If the investor sold the bond exactly in 2 years on April 29, 2016 what is the holding period return (in percentages) for this U.S. based investor?
2) On April 29, 2014 a U.S. based investor bought a U.K. government 5 year zerocoupon bond with the principal of GBP 1,000. The investor knew that she will sell the bond in 2 years on April 29, 2016 and on April 29, 2014 she entered the forward contract to exchange the currency (GBP for USD) on April 29, 2016. What is the holding period return (in percentages) for this U.S. based investor?
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta