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I need help figuring the loss of the Swiss investor in a percentage. Suppose you purchase a 10-year AAA-rated Swiss bond for par that is
I need help figuring the loss of the Swiss investor in a percentage.
Suppose you purchase a 10-year AAA-rated Swiss bond for par that is paying an annual coupon of 9 percent and has a face value of 1,700 Swiss francs (SF). The spot rate is U.S. $0.66667 for SF1. At the end of the year, the bond is downgraded to AA and the yield increases to 11 percent. In addition, the SF depreciates to U.S. $0.74074 for SF1. a. What is the loss or gain to a Swiss investor who holds this bond for a year? b. What is the loss or gain to a U.S. investor who holds this bond for a year? (For all requirements, input the amount as a positive value. Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a. Loss to Swiss investor % b. Gain to U.S. investor 8.81 %Step by Step Solution
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