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Question: Assume that you have $100,000 to invest in either U.S. or French bonds. The U.S. bonds pay 10% interest, while the French bonds pay 5% interest. Both bonds mature in one year. The dollar currently trades for 0.8 euros, and you expect the dollar to trade for 0.5 euros one year from now. Which bond should you purchase? Explain.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92587265

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