The yields on zero-coupon bonds are as follows:
$$\begin{array} { l c c }
& \text { US\$ } \% & \text { Yen\% } \
\hline 1 \text { year } & 3.00 & 500 \
2 \text { years } & 3.50 & 6.00 \
\hline
\end{array}$$ A young investment banker considers issuing a $/yen dual-currency bond for ¥100 million. It is a bond with interest paid in yen and principal repaid in dollars. The current spot exchange rate is
$1= ¥100. The bond will be reimbursed for $1 million in two years. The interest is paid on year
one and year two. What should the interest paid in yen be?

Question

The yields on zero-coupon bonds are as follows:
 $$\begin{array} { l c c } 
& \text { US\$ } \% & \text { Yen\% } \
\hline 1 \text { year } & 3.00 & 500 \
2 \text { years } & 3.50 & 6.00 \
\hline
\end{array}$$ A young investment banker considers issuing a $/yen dual-currency bond for ¥100 million. It is a bond with interest paid in yen and principal repaid in dollars. The current spot exchange rate is
$1= ¥100. The bond will be reimbursed for $1 million in two years. The interest is paid on year
one and year two. What should the interest paid in yen be?

Quizplus · Accepted Answer

The Answer of The yields on zero-coupon bonds are as follows:
 $$\begin{array} { l c c } 
& \text { US\$ } \% & \text { Yen\% } \
\hline 1 \text { year } & 3.00 & 500 \
2 \text { years } & 3.50 & 6.00 \
\hline
\end{array}$$ A young investment banker considers issuing a $/yen dual-currency bond for ¥100 million. It is a bond with interest paid in yen and principal repaid in dollars. The current spot exchange rate is
$1= ¥100. The bond will be reimbursed for $1 million in two years. The interest is paid on year
one and year two. What should the interest paid in yen be?

The Yields on Zero-Coupon Bonds Are as Follows A Young Investment Banker Considers Issuing a $/Yen Dual-Currency Bond