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illustration 68 at time 4.47 sir can u plz explain the logic of that formulae 1.06*1.03-1 i understood that USD has appreciated and all...just need to know logic of fomulae
Answers (3)
100 in bond FV 103 is end of period value of bond 3 is interest so bond proceeds if sold on last date of year are 106 (A) I invested when USD INR was say 100 - so i nvested 100 x 100 = 10000 (X) end of teh period USD appreciated so USDINR exchange rate is 103 Rs. per USD (B) So end of period money i will get when i sell th bond and move money back to india is 106 ( A) x 103 (B) net return is 106 x 103/10000 - 1 i.e (A * B )/ X - 1 = 9.18%
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