5. The yield curves on the dollar and yen are flat at 8 percent and 4 percent per year, respectively. An investment banker is considering issuing a dollar/yen dual-currency bond for Y150 million. This bond would pay the coupons in yen, and the principal would be repaid in dollars. The bond will make a principal payment of $1.36 million in two years, with interest paid in years 1 and 2 . The spot exchange rate is 110.29 per $. a. What should the coupon rate be if the bond is issued at fair market conditions-that is, if the issue price is equal to its theoretical market value? b. If the actual coupon rate is 6 percent, compute the percentage price. 6. An investment banker is considering the issue of a one-year Australian dollar/U.S. dollar currencyoption bond. The currency-option bond is to be issued in AS (A\$1,000), and the interest and principal are to be repaid in AS or USS at the option of the bondholder. The principal repaid would be either A\$1,000 or US\$520.83. The current spot exchange rate is AS1.92 per US\$. The current one-year market interest rates are 9 percent in AS and 6 percent in USS. A oneyear put option on the A\$, with a strike price of A\$1.92 per US\$, is quoted at 3 U.S. cents; this is an option to sell one A\$ for 1/US\$1.92. a. What should be the fair coupon rate set on this currency-option bond, according to market conditions? b. What is the value of the bond if it is issued at a coupon of 3.4 percent