Consider a newly issued dollar/yen dual-currency bond. This bond is issued in yen. The coupons are paid in yen and the principal will be repaid in dollars. The market price of this bond is quoted in yen. Discuss what would happen to the market price of this dual-currency bond in the following situations:
a. The market interest rate on yen bonds drops significantly.
b. The dollar drops in value relative to the yen.
c. The market interest rate on dollar bonds drops significantly.