Consider an 8.5 percent Swiss franc/U.S. dollar dual-currency bonds that pays $666.67 at maturity per SF1,000 of par value. If the bond sells at par, what is the implicit SF/$ exchange rate at maturity? Will the investor be better or worse off at maturity if the actual SF/$ exchange rate is SF1.35/$1.00?
A) SF1.5/$1.00; better off
B) SF1.5/$1.00; worse off
Correct Answer:
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