1. A Thai baht bond with a coupon of 9.5% is initially priced at its face value of Bt 1,000. At the end of one year, the bond is selling for Bt 1,050. If the initial spot rate was Bt 25 = $1, at what end- of-year exchange rate will the dollar return on the bond just equal 10%? a) Bt 1 = $0.0384 b) Bt 1 = $0.0416 c) Bt 1 = $0.0482 d) Bt 1 = $0.0324

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2. Suppose an investor buys a share of British Petroleum at a price of 32 at the start of the year. During the year, the investor receives a dividend of 1.5. At the end of the year, the price of BP is 34. During the year, the exchange rate goes from 1 = $1.78 to 1 = $1.63. What was the investor's dollar return on BP?

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