Question
HuiXia Industries operates in the US and Taiwan (Republic of China -- ROC). HuiXia is deciding whether to buy a 6.5% yielding (yield-to-maturity) bond in
HuiXia Industries operates in the US and Taiwan (Republic of China -- ROC). HuiXia is deciding whether to buy a 6.5% yielding (yield-to-maturity) bond in the US or a 6.5% yielding (yield-to-maturity) bond in Taiwan. Assume that these (nominal) returns are guaranteed in terms of the TWD for the Taiwanese bond and USD for the US bond. Suppose that your economic advisors predict that inflation will be higher in the US relative to Taiwan. All else the same, which loan should HuiXia invest in the Taiwanese bond or in the US bond?
US Bond or ROC (Taiwan) Bond
ANSWER:
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Introduction To Finance Markets, Investments, And Financial Management
Authors: Ronald W Melicher, Edgar Norton
13th Edition
0470128925, 9780470128923
