When the bond sells at par,the implicit SF/$ exchange rate at maturity of a Swiss franc/U.S.dollar dual currency bond that pays $581.40 at maturity per SF1,000,is

Question

Quizplus · Accepted Answer

When a bond sells at par, it means the market interest rate and coupon rate are the same. In this case, the bond pays $581.40 per SF1,000 at maturity. Therefore, the dollar value of SF1,000 is $581.40. To find the implicit exchange rate, we divide SF1,000 by the dollar value:

SF1,000 ÷ $581.40 = SF1.72/$1.00

Therefore, the implicit SF/$ exchange rate at maturity is SF1.72/$1.00.

When the Bond Sells at Par,the Implicit SF/$ Exchange Rate