An MNC issues ten-year bonds denominated in 500,000 Philippines pesos (PHP) at par. The bonds have a coupon rate of 15 percent. If the peso remains stable at its current level of $.025 over the lifetime of the bonds and if the MNC holds the bonds until maturity, the financing cost to the MNC will be:

Question

Quizplus · Accepted Answer

The financing cost to the MNC is directly represented by the coupon rate of the bonds, which is 15 percent. This remains unchanged regardless of the currency stability, as the question specifies that the peso remains stable at its current level.

An MNC Issues Ten-Year Bonds Denominated in 500,000 Philippines Pesos