Suppose a bond issued by the European Central Bank and denominated in euros pays 3% per...
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Suppose a bond issued by the European Central Bank and denominated in euros pays 3% per year. Today the exchange rate is 1.17 dollars per euro. It is expected that the exchange rate in one year will be 1.29 dollars per euro. What is the annual dollar return on this bond? Suppose a bond issued by the European Central Bank and denominated in euros pays 3% per year. Today the exchange rate is 1.17 dollars per euro. It is expected that the exchange rate in one year will be 1.29 dollars per euro. What is the annual dollar return on this bond?
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To calculate the annual dollar return on the bond we need to first convert the eurodenominated retur... View the full answer
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