Comment on the following statement. During the period 1987 1989, Japanese companies issued some $115 billion of

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Comment on the following statement. “During the period 1987 1989, Japanese companies issued some $115 billion of bonds with warrants attached. Nearly all were issued in dollars. The dollar bonds usually carried coupons of 4% or less; by the time the Japanese companies swapped that exposure into yen (whose interest rate was as much as five percentage points lower than the dollar's), their cost of capital was zero or negative.”

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