Suppose that you buy, and one year later sell, a foreign (British) bond under the following...

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Suppose that you buy, and one year later sell, a foreign (British) bond under the following circumstances: When you buy the b

business economics

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Answer 1

Answer #1

At the time of sell 1 Euro = $ 2.25

The bond is sold for 50 Euros

50 Euros would fetch = 50 X 2.25 ( $ 112.5)

while you pay 45 Euros ($90) for the British bond

As we get $112.5 while we only pay $90.

It means,

The gain in dollars = 112.5 - 90 = $22.5

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Answer 2

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