Compute the effective yield in us dollar terms

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Reference no: EM131903354

If you invest $6,000 in Euro bond for 1 yr paying 5 percent interest. At the time the investor bought the Euro bond, the exchange rate was $1.00 per Euro.

a. If 1 year later you convert the maturity value of the investment in Euro to US dollars, the exchange rate was $ 1.02 per Euro, compute the effective yield in US dollar terms.

b. If 1 year later you convert the maturity value of the investment in Euro to US dollars, the exchange rate was $ 0.95 per Euro, compute the effective yield in US dollar terms.

Reference no: EM131903354

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