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To what extent must the Zambian Kwacha depreciate to the USD to make a loss in USD terms. Details: 10 Year bond with a 13% coupon paid out every 6 months. 15% withholding tax is being deducted as final tax and 2% handling fee is being charged by Bank of Zambia.

Term: 10 years Face value K 600,000.00 Actual cost K 343,924.80 Current FX rate is 12.70 Kwacha to US Dollar.

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    $\begingroup$ What I would do is model this on Excel pulling in the cash flows as well as the price and yield and then goal seek for the FX where the PV would be $0. $\endgroup$ – Zambezi May 4 at 14:15
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    $\begingroup$ Write down the net cash flows from the bond (after tax) in Kwachas. Find the exchange rate which makes the sum of these cash flows equal to the amount (in dollars) that the investor paid for the bond. $\endgroup$ – Alex C May 4 at 17:44

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