While working abroad, U. S. citizen Dirk Senik purchases a foreign bond with an annual coupon of 7.5 percent for 95.5. One year later, the exchange rate between the dollar and the foreign currency remains unchanged and he sells the bond for 97.25, resulting in a holding period return of 9.7 percent. If the foreign currency had depreciated in relation to the dollar, Senik’s return would be:（）
A. greater than 9.7 percent.
B. equal to 9.7 percent.
C. less than 9.7 percent.
参考答案：C
解析：
The return on a foreign bond is a combination of the return on the bond and the movement in the foreign currency. In the base case, the movement in the foreign security was 0 and thus the return was just the holding period return on the bond. If the foreign currency depreciates, the return will be lowered because the investor will lose upon conversion to the dollar.