Suppose you have just purchased a 10-year General Electric €100 million zero-coupon bond at 8% YTM. The exchange rate is USD1.1/EUR. What will be your rate of return if one year from now the YTM on similar bonds have dropped to 3% and the exchange rate is USD1.4/EUR?

Answer rating: 100% (QA)

To calculate the rate of return on the bond we need to consider both the change in the bonds price d... View the full answer