Discuss the markets belief about jpy-usd rates

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Assignment:

a. Consider the following security for a Japanese firm traded on an exchange: A two-year dual-currency bond with annual coupon rate 5% on the notional par $10,000 and $100 principal. In the OTC market there is an one-year forward with forward price $1 = V100, a two-year forward with forward price $1 = V110 and a two-year 4% Euroyen bond sells at par. What's the * price of the dual-currency?

b. In the Disney Yen case, briefly discuss the market's belief about JPY-USD rates and their supporting evidence. Why did Disney insist on hedging the JPY income?

Reference no: EM133300502

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