A U.S. resident purchases a bond issued by the Canadian government. If the Canadian dollar appreciates relative to the U.S. dollar over the term of the bond, the U.S. investor will:

Question

Quizplus · Accepted Answer

When the Canadian dollar appreciates relative to the U.S. dollar, the value of the bond's interest payments and principal, when converted back to U.S. dollars, increases. This results in a higher return for the U.S. investor.

A US Resident Purchases a Bond Issued by the Canadian Government