Find the total return on this bond in us dollars

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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 9.62?% coupon. The bond has a par value of 6,000 Swiss francs? (CHF) and is currently trading at 112.67 (i.e., at 112.67?%of? par).Letticia plans to hold the bond for a period of 1? year, at which time she thinks it will be trading at 118.73 long dash—?she's anticipating a sharp decline in Swiss interest? rates, which explains why she expects bond prices to move up. The current exchange rate is 1.58 ?CHF/U.S. $, but she expects that to fall to 1.23 CHF/U.S. $. Use the foreign investment total return formula to find the information below.

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.

Reference no: EM131998026

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