Consider a British pound-U.S.dollar dual currency bonds that pay £581.40 at maturity per $1,000 of par value.If at maturity,the exchange rate is $1.90 = £1.00,

Question

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The bond pays £581.40 at maturity, which at an exchange rate of $1.90/£1.00 equals $1,104.66 ($1.90 * £581.40). Since this amount is more than the $1,000 par value, investors benefit from the exchange rate, making them better off, and the issuer is worse off because they have to pay more in dollar terms than the original par value.

Consider a British Pound-U