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Suppose yields on A-rated corporate bonds in Canada and China are 2% and 5%, respectively, for a 3-year tenor. Suppose a Chinese investor buys a bond...
Suppose yields on A-rated corporate bonds in Canada and China are 2% and 5%, respectively, for a
3-year tenor. Suppose a Chinese investor buys a bond issued by a Canadian corporation. If Uncovered Interest Parity (UIP) holds for the 3-year period, what is
the percentage change in the CAD versus the CNY? If the bond is held-to-maturity, 1,000,000 CNY will
grow to approximately how many yuan?
with this question, what formula should I use? Since we don't know the currency rate according to the question