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An investment manager for a US-based fund is comparing two one-year government bonds. The first is a US government bond offering a 3% annual return. The second is a government bond from Country Z, offering a 7% annual return, with the return guaranteed in Country Z's local currency. To accurately compare the potential returns in US dollars, which of the following pieces of information is most essential for the manager to consider?
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An investment manager for a US-based fund is comparing two one-year government bonds. The first is a US government bond offering a 3% annual return. The second is a government bond from Country Z, offering a 7% annual return, with the return guaranteed in Country Z's local currency. To accurately compare the potential returns in US dollars, which of the following pieces of information is most essential for the manager to consider?
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