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Author Question: Suppose a U.S. firm buys a one-year U.K. bond for 6,000 British pounds when 1 British pound is worth ... (Read 130 times)

bcretired

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on: Jun 30, 2018
Suppose a U.S. firm buys a one-year U.K. bond for 6,000 British pounds when 1 British pound is worth 1.50 on the foreign exchange market. What is the firm's approximate rate of return on the bond if the interest rate on the bond is 15 percent and the exchange rate is 1 British pound is worth 1.93 at maturity?
 a. 11 percent
  b. 15 percent
  c. 25 percent
  d. 33 percent
  e. 48 percent

Question 2

U.S. imports are considered:
 a. a credit or plus item in the U.S. balance of payments.
  b. a credit or minus item in the U.S. balance of payments.
  c. a debit or plus item in the U.S. balance of payments.
  d. a debit or minus item in the U.S. balance of payments.


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yuyiding

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Reply #1 on: Jun 30, 2018
Answer to Question 1

e

Answer to Question 2

d


bcretired

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Reply #2 on: Jun 30, 2018
Thank you :)


yuyiding

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Reply #3 on: Jun 30, 2018
Happy to help you


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