Questions 27-32 Sony (Japan) is considering a bond issue. For convenience we will consider 3 year maturity and issue size of $ 1,000,000. The underwriting fees are 4% of par. Issue price is $ 1,000 per bond. Coupon size is $ 100/year (paid annually). Sony wants to hedge using 1) Yen-$ swap or 2) using Yen-$ forwards. Find the following (use 4 decimals or more before rounding): # Annual Swap rates versus six-month US$ LIBOR Pay rate % USD 11.8 Euro 6.00 Yen 7.10 Receive Rate % 11.95 6.30 7.40 Foreign Currency Forward Rates. Yen per USD. Hint: Subtract points Bid Offer Spot 254.10 254.20 Points 1 year 7.25 6.95 Points 2 year 18.50 15.50 Points 3 year 30.00 26.50 Points 4 vear 40.50 36.00 27) IRRs for the bond holders is a) 10% b)_1117% c) 11.66 d) 12.38% d) 1.03% e) none of the above are within +/-0.01. 28) IRRs for Sony (without any hedging) is: a) 10% b) 1117% c) 11.66% d) 12.38% e) none of the above are within +/-0.01 29) The dollar amount of the notional principal' for a Yen-$ swap in (thousands of $) is a) $ 9566 b) $ 969.50 c) $ 953.1 d) $ 1,000.00 e) none of the above are within =/- 0.01 30) The yen amount of the notional principal' for a yen-$ swap in (millions of Yens) is a) Yen 242.19 b) Yen 243.17 c) Yen 246.45 d) Yen 24.219 e) none of the above are within +/-0.01. 31) IRRYEN for Sony, with Yen-$ swap is a) 6.79% b) 6.82% c) 7.28% d) 7.72% e) none of the above are within +/-0.01. 32) IRRYEN for Sony, with Yen-$ forwards is a) 6.79% b) 6.82% c) 7.28% d) 7.72% e) none of the above are within +/-0.01. Questions 27-32 Sony (Japan) is considering a bond issue. For convenience we will consider 3 year maturity and issue size of $ 1,000,000. The underwriting fees are 4% of par. Issue price is $ 1,000 per bond. Coupon size is $ 100/year (paid annually). Sony wants to hedge using 1) Yen-$ swap or 2) using Yen-$ forwards. Find the following (use 4 decimals or more before rounding): # Annual Swap rates versus six-month US$ LIBOR Pay rate % USD 11.8 Euro 6.00 Yen 7.10 Receive Rate % 11.95 6.30 7.40 Foreign Currency Forward Rates. Yen per USD. Hint: Subtract points Bid Offer Spot 254.10 254.20 Points 1 year 7.25 6.95 Points 2 year 18.50 15.50 Points 3 year 30.00 26.50 Points 4 vear 40.50 36.00 27) IRRs for the bond holders is a) 10% b)_1117% c) 11.66 d) 12.38% d) 1.03% e) none of the above are within +/-0.01. 28) IRRs for Sony (without any hedging) is: a) 10% b) 1117% c) 11.66% d) 12.38% e) none of the above are within +/-0.01 29) The dollar amount of the notional principal' for a Yen-$ swap in (thousands of $) is a) $ 9566 b) $ 969.50 c) $ 953.1 d) $ 1,000.00 e) none of the above are within =/- 0.01 30) The yen amount of the notional principal' for a yen-$ swap in (millions of Yens) is a) Yen 242.19 b) Yen 243.17 c) Yen 246.45 d) Yen 24.219 e) none of the above are within +/-0.01. 31) IRRYEN for Sony, with Yen-$ swap is a) 6.79% b) 6.82% c) 7.28% d) 7.72% e) none of the above are within +/-0.01. 32) IRRYEN for Sony, with Yen-$ forwards is a) 6.79% b) 6.82% c) 7.28% d) 7.72% e) none of the above are within +/-0.01
