What will the future/forward exchange rate be

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1. Calculate the price of a $1000 face value bond, maturing in three years with a 9 percent coupon (paid semiannually) if current real rates of interest are 4 percent, historical inflation rates are 3 percent, and expected inflation rates are 4 percent.

2. The interest rates in the Swiss franc and the Australian dollar are .03 and .05 respectively. If the Exchange Rate is 1.4 SF per 1 AUD in the spot market, what will the future/forward Exchange Rate be, if the Internation Fisher Effect applies.

3. XYZ, Inc. has issused a $1,000 par 7% annual coupon bond that is to mature in 20 years. If your required rate of return is 8.5%, what price would you be willing to pay for the bond? (assume m=1)

Reference no: EM132008800

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