The Figure Given Below Depicts the Foreign Exchange Market for British

question 82

Multiple Choice

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-An Australian investor buys a U.S. Treasury bond that has a price of $10,000, pays 5 percent interest, and matures in a year. Between the purchase date and the maturity date, the exchange rate changes from $1 = AUD 5.0 to $1= AUD 5.2. What will be the Australian investor's rate of return from the U.S. bond?

• A)4 percent
• B)7 percent
• C)9.2 percent
• D)12 percent
• E)25 percent

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