An American investor is considering investing today in a one year Chinese corporate bond which pays interest
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Question:
An American investor is considering investing today in a one year Chinese corporate bond which pays interest and par in RMB. The bond has a yield to maturity of 8%. The current spot exchange rate is $.15 per RMB and the current one year forward rate is $.16. After one year, the spot rate changes to $.17 and the one year forward rate changes to $ .18. The uncovered return for the American is ____ and the covered return is ____.
A. 14.67%/21.33%
B. 15.21%/12.25%
C. 21.33%/14.67%
D. 12.25%/15.21%
E. None of these
Related Book For
Fundamentals of Investments Valuation and Management
ISBN: 978-0077283292
5th edition
Authors: Bradford D. Jordan, Thomas W. Miller
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