How much did they lose due to the decline in the bond price

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Question - An American investor purchases a single Eurobond from their personal financial advisor. The bond is denominated in Euros, but the investor uses their American dollars to make the purchase. The bond sells for 1023 euros, and has a par value of 1000 euros. At the time of purchase, the exchange rate is $1 US Dollar per 1.24 Euros. The coupon rate on the bond is 8%, paid annually. One year later, the coupon is paid and the investor sells the bond for 918 euros. The exchange rate at the time of sale has fallen to $1 US Dollar per 1.10 Euros.

Required -

1- How much money did the investor earn from coupon interest, in dollars?

2- How much did they lose due to the decline in the bond's price?

3- How much did they gain from the change in the exchange rate?

4- What was the bond's selling price, in US Dollars?

5- What was the investor's total earnings during the year, in US Dollars?

Reference no: EM133117849

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