What would be the change in a bond price

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a) If the interest rate in the United Kingdom is 8%, the interest rate in the United States is 10%, the spot exchange rate is $1.75/£1 and the forward rate of exchange is also $1.75/£1. How could an investor take advantage of this situation?

b) What would be the change in a bond price (face value ¥1,000, annual coupon rate 5%, 4-year maturity) due to the change in YTM by (-1%)?

Reference no: EM132558488

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