The Export Development Canada issued a bond on March 17, 2016. The terms were as follows:

Currency of denomination : Japanese Yen (JPY)

Denomination : JPY100,000,000

Maturity date : March 18, 2026, or an optional redemption date

Redemption/payment basis : Redemption at par value

Interest payment dates : March 18 and September 18 in each year

Optional redemption dates : The issuer has the right to call the instruments in whole (but not in part) at par starting on March 18, 2019.

Interest rate: Fixed rate for the first three years up to but excluding March 18, 2012: 1.5%

March 18, 2019 September 18, 2019 1.75% 6month JPY LIBORBBA

September 18, 2019 March 18, 2020 1.75% 6month JPY LIBORBBA

March 18, 2020 September 18, 2020 2.00% 6month JPY LIBORBBA

September 18, 2020 March 18, 2021 2.00% 6month JPY LIBORBBA

March 18, 2021 September 18, 2021 2.25% 6month JPY LIBORBBA

September 18, 2021 March 18, 2022 2.25% 6month JPY LIBORBBA

March 18, 2022 September 18, 2022 2.50% 6month JPY LIBORBBA

September 18, 2022 March 18, 2023 2.50% 6month JPY LIBORBBA

March 18, 2023 September 18, 2023 2.75% 6month JPY LIBORBBA

September 18, 2023 March 18, 2024 2.75% 6month JPY LIBORBBA

March 18, 2024 September 18, 2024 3.00% 6month JPY LIBORBBA

September 18, 2024 March 18, 2025 3.00% 6month JPY LIBORBBA

March 18, 2025 September 18, 2025 3.25% 6month JPY LIBORBBA

September 18, 2025 March 18, 2026 3.25% 6month JPY LIBORBBA

(a) Explain what is meant by JPY LIBORBBA. (7 marks)

(b) Describe the coupon interest characteristics of this bond. (6 marks)

(c) Discuss the risks that are associated with investing in this bond if the investors home currency is not in Japanese yen. (12 marks)