Sabrina is based in the U.S. and she would like to invest in an Australian corporation to diversify her portfolio. Currently the Australian corporation is issuing two bonds in the U.S. market:

• Bond NYS which is a Eurobond.
• Bond NUT which is a Foreign bond.

1. Please fill in the blanks below.

Bond NYS should not be denominated in (which currency?) when it is issued and bond NUT should be denominated in (which currency?)

[2 Marks]

B. Sabrina finds that the USD/AUD exchange rate has been quite volatile over the past six months. She is concerned about the exchange rate volatility, which bond is best for her and please explain your answer. [3 marks]