PPT Slide
Dollar value of an XYZ bond is the XYZ value of the bond times the
spot exchange rate dollar per XYZ, that is,
v1(t, T) = P1(t, T)e1(t).
P1(t, T) is the default free XYZ bond price in XYZ currency world.
The XYZ bonds become default free in XYZ currency world. The
pseudo spot exchange rate e1(t) is interpreted as the payoff ratio in