If the currency of a foreign currency-denominated bond ____, the funds needed to make coupon payments will ____.

Question

Quizplus · Accepted Answer

When the currency of a foreign currency-denominated bond appreciates, the issuer will need more of their local currency to purchase the foreign currency needed for coupon payments, thus increasing the funds needed. Conversely, if the currency depreciates, the issuer will need less of their local currency to make the same payments, thereby decreasing the funds needed.

If the Currency of a Foreign Currency-Denominated Bond ____, the Funds