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Suppose that a bond issued by the European Central Bank and denominated in euros pays 2% per year. Today the exchange rate is $1.85 per
Suppose that a bond issued by the European Central Bank and denominated in euros pays 2% per year. Today the exchange rate is $1.85 per euro. It is expected that the exchange rate in one year will be $2.04 per euro. What is the expected annual dollar return on this bond?
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