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

question 45

Multiple Choice

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

• A)SF0.58/$1.00.
• B)SF1.58/$1.00.
• C)SF1.72/$1.00.
• D)SF1.95/$1.00.

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Definitions:

Dividend Income

Income from dividends, which are payments made by a corporation to its shareholder members. It is often derived from the company's profits.

Cost of Equity

The rate of return that a company must offer investors to compensate for the risk of investing in its equity.

Flotation Costs

Expenses incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

Dividends Low

This term implies a situation where a company issues dividends at a lower rate or amount, possibly reflecting a strategy to reinvest earnings into the business or an indication of financial conservation.