Which bond should an investor choose: Dollar-denominated bond Euro-denominated bond i$ = 6% i€ = 8% spot exchange rate = .90 euro/$1 expected future spot exchange rate = .96 euro/$1 Assume a 1-year...

Which bond should an investor choose:

Dollar-denominated bond Euro-denominated bond

i$ = 6% i€ = 8%

spot exchange rate = .90 euro/$1

expected future spot exchange rate = .96 euro/$1

Assume a 1-year time horizon.

Show all calculations. Also, explain in words.