If you invest US$1,000 in Brazilian Real bond for 1 year paying 8.5% interest. At the time you bought the Brazilian Real bond, the exchange rate was US$.0.3205 per Brazilian Real.
a) If 1 year later you convert the maturity value of the investment in Brazilian Real to US dollars, the exchange rate was US$ 0.3612 per Brazilian Real, compute the effective rate of return in US dollar terms.
b) If 1 year later you convert the maturity value of the investment in Brazilian Real to US dollars, the exchange rate was US$ 0.3025 per Brazilian Real, compute the effective rate of return in US dollar terms.
Please calculate the effective rates of return using both the methods?