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A zero-coupon French bond promises to pay 100,000 in five years. The current exchange rate is $1.50 = 1.00 and inflation is forecast at 3
A zero-coupon French bond promises to pay 100,000 in five years. The current exchange rate is $1.50 = 1.00 and inflation is forecast at 3 percent in the U.S. and 2 percent in the euro zone per year for the next five years. The appropriate discount rate for a bond of this risk would be 10 percent if it paid in dollars. What is the appropriate price of the bond?
65,196.13 = $97,794.20 | ||
62,092.13 = $93,183.20 | ||
none of the options |
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