15. [Catastrophe bonds] In March 2000, Atlas Re, an affiliate of the French insurance company SCOR ISC O] issued three classes of three-year "catastrophe bonds The three classes have coupon rates ranging from 270 to 1400 basis points (2.7% to 14%) in excess of the LIBOR rate However, in the event of cer- tain defined insurance losses in Europe. Japan, and the United States, interest and the redemption amounts would be reduced

a. Ixplam why an investor might find these bonds to be a worthwhile investment

b. Describe the impact of these bonds on SCOR's reported in- come and interest coverage ratio in a time period with no in- surance losses covered by these bonds

c. Describe the impact of these bonds on SCOR's reported in- come and interest coverage ratio in a time period with large insurance losses covered by these bonds.

d. Explain the effect of these bonds on the variability of SCOR reported income.