It's REPORTED as income of 260 Euros. If it never gets converted from dollars to Euros, it's still $400 to the bond holder (at least for now).
Remember -- a European investor today is not making decisions based on the assumption that the U.S. dollar is (or ever will be) completely worthless . . . he's betting that the U.S. dollar is going to go up, down, up, down, etc. over different intervals in the future. And he's making investment decisions accordingly.
At least for now, 260 Euros is equal to $400 dollars. So what? No benefit to the bond holder.
Remember -- a European investor today is not making decisions based on the assumption that the U.S. dollar is (or ever will be) completely worthless . . . he's betting that the U.S. dollar is going to go up, down, up, down, etc. over different intervals in the future. And he's making investment decisions accordingly.
Agreed. And that's why the discounted bond, isn't.