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Find the Value of a Three-Year Dual Currency Bond with Annual

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Find the value of a three-year dual currency bond with annual coupons (paid in U.S. dollars at a 5 percent coupon rate) that pays £500 per $1,000 par value at maturity. The cash flows of the bond are: Find the value of a three-year dual currency bond with annual coupons (paid in U.S. dollars at a 5 percent coupon rate)  that pays £500 per $1,000 par value at maturity. The cash flows of the bond are:   The dollar-based yield to maturity is i<sub>$</sub> = 3%; the spot exchange rate is $1.80 = £1.00; expected inflation over the next three years is π<sub>$</sub> = 2% in the U.S. and π<sub>£</sub> = 3% in the U.K. A) $927.62 B) $941.30 C) $965.06 D) $987.06 The dollar-based yield to maturity is i$ = 3%; the spot exchange rate is $1.80 = £1.00; expected inflation over the next three years is π$ = 2% in the U.S. and π£ = 3% in the U.K.


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