Red Electrica Espaa SA (E.REE) is refinancing its bank loans by issuing Eurobonds to investors. You are

Question:

Red Electrica España SA (E.REE) is refinancing its bank loans by issuing to investors. You are considering buying $10,000 of these bonds, which will yield 6%. You are also looking at a U.S. bond with similar risk that will yield 5%. You expect that interest rates will not change over the course of the next year, after which time you will sell the bonds you purchase.
a. How much will you make on each bond if you buy it, hold it for 1 year, and then sell it for $10,000 (or the Eurodollar equivalent)?
b. Assume the dollar/euro goes from 1.11 to 0.98. How much will this currency change affect the proceeds from the Eurobond?
Eurobonds
A Eurobond is a debt instrument that's denominated in a currency other than the home currency of the country or market in which it is issued. Eurobonds are frequently grouped together by the currency in which they are denominated, such as eurodollar... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...