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Use the following information to answer questions 6-9. A 3 year dual currency AAA rated bond (Euro-USD) pays a 7.5% annual coupon in Euros (on
Use the following information to answer questions 6-9. A 3 year dual currency AAA rated bond (Euro-USD) pays a 7.5% annual coupon in Euros (on a par value of a 1000 Euros). The principal repaid will be US $ 1250. The zero coupon yield curves for 1,2 and 3 year maturity AAA rated Euro denominated bonds and AAA rated US$ denominated bonds are given below. The current spot rate is $ 1.31/Euro. 3 year 1 year 3.5 % 12 year 4.0 % Euro denominated USS denominated 12.5 % 30 % B5% 6. How much would you be willing to pay today in USD for only the bond's coupon payments? 7. How much would you be willing to pay today in USD for the bond's principal payment? 8. How much would you be willing to pay today in USD for this bond (considering both coupons and principal payment)? 9. How much would you be willing to pay today in Euros for this bond (considering both coupons and principal payment)
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