Question
If you invest US$1,000 in Brazilian Real bond for 1 year paying 6.5%t interest. At the time you bought the Brazilian Real bond, the exchange
- If you invest US$1,000 in Brazilian Real bond for 1 year paying 6.5%t interest. At the time you bought the Brazilian Real bond, the exchange rate was US$.0.390 per Brazilian Real.
a) If 1 year later you convert the maturity value of the investment in Brazilian Real to US dollars, the exchange rate was US$ 0.415 per Brazilian Real, compute the effective rate of return in US dollar terms.
b) If 1 year later you convert the maturity value of the investment in Brazilian Real to US dollars, the exchange rate was US$ 0.380 per Brazilian Real, compute the effective rate of return in US dollar terms.
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Principles Of Managerial Finance
Authors: Lawrence J Gitman, Chad J Zutter
7th Edition
0133546403, 9780133546408
