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Question
An investor bought a one-year government bond of Country X with a nominal interest rate of 6 percent. If the current exchange rate between the U.S. dollar and Country X's currency is 50 units per dollar and the expected exchange rate after a year is 48 units per dollar, what is the expected dollar return of investing in Country X's bond?a. 4 percent
b. 3 percent
c. 8 percent
d. 12 percent
Answer
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