Question

Suppose that you​ buy, and one year later​ sell, a foreign​ (British) bondLOADING... under the following​ circumstances: When you buy the bond the exchange rate is ​$2.00 ​= pound1. You pay pound45 ​($90.00​) 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​ $2.30 ​= pound1. What is your gain or loss in​ dollars? ​$ nothing. ​(Round your response to the nearest penny and include a minus sign for a​ loss.)

Answer 1

The loss is - $25

Step-by-step explanation:

The computation of the gain or loss is shown below:

= Paying cost - (Selling price × number of bonds)

= $90 - ($2.30 × 50)

= $90- $115

= - $25

We deduct the selling cost from the paying cost to determine the actual value of loss or gain.

The negative amount represents the loss, and if the positive amount comes then it reflects the gain.