A U S insurance company invests $1,000,000 in a private placement of British bonds Each bond pays 300 in interest per year for 20 years If the current exchange rate is 1 5612 for U S $1, what is the nature of the insurance companys exchange rate risk Specifically, what type of exchange rate movemen...

In this case the insurance company is worried about the value ...

A U.S. insurance company invests $1,000,000 in a private placement of British bonds. Each bond pays 300

Question:

A U.S. insurance company invests $1,000,000 in a private placement of British bonds. Each bond pays £300 in interest per year for 20 years. If the current is £1.5612 for U. S.$1, what is the nature of the insurance company’s risk? Specifically, what type of movement concerns this insurance company?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...