A five-year, 9.0 percent Euroyen bond sells at par. A comparable risk five-year, 10.5 percent yen per dollar dual currency bond pays $ 843.33 at maturity. It sells for ¥110,000. What is the implied ¥ per $ exchange rate at maturity? Hint: The dual-currency bond pays 10.5 percent interest on a notional value of ¥100,000, whereas the par value of the bond is not necessarily equivalent to ¥100,000.

A five-year, 9.0 percent Euroyen bond sells at par. A comparable risk five-year, 10.5 percent yen per dollar dual currency bond pays $ 843.33 at maturity. It sells for ¥110,000. What is the implied ¥ per $ exchange rate at maturity? Hint: The dual-currency bond pays 10.5 percent interest on a notional value of ¥100,000, whereas the par value of the bond is not necessarily equivalent to ¥100,000.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 10P

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