Suppose 6 months ago a Swiss investor bought a 6-month U.S. Treasury bill at a price of $9,708.74, with a maturity value of $10,000. The exchange rate at that time was 1.420 Swiss francs per dollar. Today, at maturity, the exchange rate is 1.324 Swiss francs per dollar. What is the annualized rate of return
to the Swiss investor?
Which of the following statements is NOT CORRECT?
Any bond sold outside the country of the borrower is called an international bond.
Foreign bonds and Eurobonds are two important types of international bonds.
Foreign bonds are bonds sold by a foreign borrower but denominated in the currency of the country in which the issue is sold.
The term Eurobond applies only to foreign bonds denominated in U.S. currency.
A foreign bond might pay a higher nominal interest rate than a U.S. bond.
Suppose that currently, 1 British pound equals 1.62 U.S. dollars and 1 U.S. dollar equals 1.62 Swiss francs. What is the cross exchange rate between the pound and the franc?
1 British pound equals 3.2400 Swiss francs
1 British pound equals 2.6244 Swiss francs
1 British pound equals 1.8588 Swiss francs
1 British pound equals 1.0000 Swiss francs
1 British pound equals 0.3810 Swiss francs