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What is the loss or gain to an australian investor

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Suppose you purchase a 8-year AAA-rated Swiss bond for par that is paying an annual coupon of 5 percent. The bond has a face value of 1000 Swiss francs (SF). The spot rate at the time of purchase is SF1.60/$1. At the end of the year, the bond is downgraded to AA and the yield increases to 8 percent. In addition, the SF appreciates to SF1.35/$1.

What is the loss or gain to an Australian investor who holds this bond for a year?

Reference no: EM132499305

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