An MNC issues ten-year bonds denominated in 500,000 Philippines pesos (PHP) at par. The bonds have a coupon rate of 15%. If the peso remains stable at its current level of £0.014 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 the coupon rate of the bonds, which is 15%, as the peso remains stable and the bonds are held until maturity.

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