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Comparison of a Dual Currency Bond vs. a Conventional Bond Imagine the Japanese yen is currently trading at 100 per U.S. dollar and you observe
Comparison of a Dual Currency Bond vs. a Conventional Bond Imagine the Japanese yen is currently trading at 100 per U.S. dollar and you observe the following 10-year zero coupon rates: U.S.: 2.50% p.a. Japan: 0.50% p.a. You are a Japanese investor who wishes to invest in a 10-year Japanese corporate bond and you are considering the following two alternatives from the same issuing entity: Alternative (i): A conventional bond with the following terms: Coupon: 0.50% (paid annually) Par Amount: JPY 100,000 (paid at maturity) Issue price: 100% (i.e., par) Alternative (ii): A dual currency bond with the following terms: Coupon: 1.50% (paid annually) Par Amount
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