What exchange risk did mitsubishi estate face

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Reference no: EM131490203

In 1989 and 1990, the Japanese company Mitsubishi Estate Co. paid the Rockefeller family $1.4 billion for an 80% stake in New York's Rockefeller center. At the time, the exchange rate was 145 yen/$. When the investor went to sell the building 5 years later, in early 1995, the exchange rate was 85 yen/$ and the property's value had decreased to $800 million.

a) What exchange risk did Mitsubishi Estate face at the time of purchase?

b) How could Mitsubishi have hedged this risk?

Reference no: EM131490203

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