1. Mitsubishi Corporation, one of major MNCs in Japan, consider raising capital for their investment projects in international bond market. For that, Mitsubishi Corporation plan to issue reverse dual-currency bonds as instruments.

1. Why do you think Mitsubishi Corporation choose dual-currency bonds? What are the advantages?

2. The following is the detail information on the reverse dual-currency bonds that Mitsubishi Corporation will issue.

A 6% /$ 7-year dual-currency bond pays $825.50 at maturity. This dual-currency bond pays coupon payment at 6% coupon rate with the face value of 100,000. A comparable bond with the similar risk characteristics offers 5% which can be used as the interest rate or discount rate. The implied /$ exchange rate at maturity is 125/$.

What is the selling price of this dual-currency bond that Mitsubishi Corporation will issue?