Letticia$$ Garcia, an aggressive bond$$ investor, is currently thinking about investing in a foreign$($non$-$dollar$-$denominated$)$ government bond. In$$ particular, she's looking at a Swiss government bond that matures in $15$ years and carries a coupon of $8\mathrm{.}99\%.$ The bond has a par value of $15$ comma $000$ Swiss francs$($CHF$)$ and is currently trading at $111\mathrm{.}91($i$.$e$.,$ at $111\mathrm{.}91\%$ of$$ par$).$

Letticia plans to hold the bond for one$$ year, at which time she thinks it will be trading at $122\mathrm{.}43$long dash$$she$\text{'}$s anticipating a sharp decline in Swiss interest$$ rates, which explains why she expects bond prices to move up$.$ The current exchange rate is $1\mathrm{.}61$CHF$/$U$.$S$.$$$,$ but she expects that to fall to $1\mathrm{.}28$CHF$/$U$.$S$.$$$.$ Use the foreign investment total return formula to find the following information.

a$.$ Ignoring the currency$$ effect, find the$$ bond's total return$($in its local$$ currency$).$

b$.$ Now find the total return on this bond in U$.$S$.$ dollars. Did currency exchange rates affect the return in any$$ way? Do you think this bond would make a good$$ investment? Explain.

Question content area bottom

Part $1$

a$.$ Ignoring the currency$$ effect, the$$ bond's total return$($in its local$$ currency$)$ is

$$

enter your response here$\%.($Round to two decimal$$ places.$)$