Question: APS textiles BD LTD has a chance to make a small investment (US bond @ 10% annual interest rate) in USA. Recently the exchange rate

APS textiles BD LTD has a chance to make a small investment (US bond @ 10% annual interest rate) in USA. Recently the exchange rate between BDT and USD is fluctuating on a random basis. To reduce the exchange rate risk of USD investment, APS has decided to get in a 2-year forward contract to convert the proceeds to BDT in 2 years. APS has 10,000 BDT to invest at this moment.The current exchange rate (BDT/USD) = 84.2-year forward rate (BDT/USD) = 85.2.

What is the return (in BDT) on the total bond investment (BDT 10,000) in USA after 2 years?

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