Question

When you buy the bond the exchange rate is ​$1.50 ​= pound1. You pay pound45 ​($67.50​) for the British bond. You sell the bond for pound50. No interest payment was expected or received. When you sell the​ bond, the exchange rate is​ $1.70 ​= pound1.

Answer 1

The gain is of $17.50

Explanation:

When you buy the bond the exchange rate is ​$1.50 ​= £1.

You pay £45 =
`1.50*45`=​$67.50 for the British bond.

No, you sell the bond for £50 and the exchange rate is​ $1.70 ​= £1.

So, you earned
`50*1.70=85` dollars

Your gain is
`85-67.50` = $17.50