You are British and hold a U.S. Treasury bond with a full price of 100 and a duration of 13. Its yield is 5 percent. The next day, U.S. yields move up by 5 basis points and the dollar depreciates by 1 percent relative to the British pound. Give a rough estimate of your loss in British pounds. If the pound cash rate is 3 percent, what is risk premium?

You are British and hold a U.S. Treasury bond with a full price of 100 and a duration of 13. Its yield is 5 percent. The next day, U.S. yields move up by 5 basis points and the dollar depreciates by 1 percent relative to the British pound. Give a rough estimate of your loss in British pounds. If the pound cash rate is 3 percent, what is risk premium?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter22: International Financial Management

Section: Chapter Questions

Problem 2P

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