I need fast answer please no plagiarism i give up vote 9. A 3-year dual currency AA rated bond (Euro-USD) pays a 5% annual coupon in Euros (on a parvalue of a 1000 Euros). The principal repaid will be US $ 1350. The zero coupon yield curves for1,2 and 3 year maturity AA rated Euro denominated bonds and AA rated US$ denominated bondsare given below. The current spot rate is $ 1.35/Euro.EurodenominatedUS$denominated1 year2.5%3.0%A zero-couponbondUS$denominated2 year3.0%1 year3.5%How much would you be willing to pay today in Euros for this bond (considering both couponsand principal payment)?Ans: Euros 10303.0%10. A 3-year A rated USD denominated bond pays a 4% annual coupon (on a par value of a 1000USD). The zero-coupon yield curve for 1,2 and 3 year maturity A rated US$ denominated bonds isgiven below.3 year3.5%2 year4.0%3.5%3 year4.0%How much would you be willing to pay today for this bond (considering both coupons andprincipal payment)?Ans: USD 1000.73

The forward rates are computed using the spot rates using the given formula:In the given question…

9. A 3-year dual currency AA rated bond (Euro-USD) pays a 5% annual coupon in Euros (on a par value of a 1000 Euros). The principal repaid will be US $ 1350. The zero coupon yield curves for 1,2 and 3 year maturity AA rated Euro denominated bonds and AA rated US$ denominated bonds are given below. The current spot rate is $ 1.35/Euro. Euro denominated US $ denominated 1 year 2.5% 3.0% 2 year 3.0% 3.5% 3 year 3.5% 4.0% How much would you be willing to pay today in Euros for this bond (considering both coupons and principal payment)? Ans: Euros 1030

9. A 3-year dual currency AA rated bond (Euro-USD) pays a 5% annual coupon in Euros (on a par value of a 1000 Euros). The principal repaid will be US $ 1350. The zero coupon yield curves for 1,2 and 3 year maturity AA rated Euro denominated bonds and AA rated US$ denominated bonds are given below. The current spot rate is $ 1.35/Euro. Euro denominated US $ denominated 1 year 2.5% 3.0% 2 year 3.0% 3.5% 3 year 3.5% 4.0% How much would you be willing to pay today in Euros for this bond (considering both coupons and principal payment)? Ans: Euros 1030

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter18: Long-term Debt Financing

Section: Chapter Questions

Problem 9QA

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