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Suppose you purchase a 8 year AAA-rated Swiss bond for par that is paying an annual coupon of 8 percent and has a face value
Suppose you purchase a 8 year AAA-rated Swiss bond for par that is paying an annual coupon of 8 percent and has a face value of 1.500 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 10 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 decimol places. (e.9., 32.16))
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