exchange rate risk

exchange rate risk
Prepare a series of spreadsheets showing the cash flows associated with each of the three bond
issues expressed in terms of the appropriate currency for decision making as applicable.
2. Compare the annualized all-in cost of each bond issue assuming exchange rate risk for the
Eurobond issues is hedged using the forward rates provided. (Note: The annualized all-in cost is the
internal rate of return that equates the present value of the future US dollar outlays with today’s US
dollars received, net of fees.)
3. Make a recommendation to Christian assuming the exchange rate risk for the Eurobond issues is hedged using the forward rates provided.
4. Assume that Christian decided not to hedge the exchange rate risk with forward rate contracts and left the Eurobonds un-hedged. Use the following exchange rate
scenarios:
a. Scenario A: The Euro is currently trading at the given spot rate but strengthens relative to the dollar by 3,75% each year for the next 5 years.
b. Scenario B: The Euro is currently trading at the given spot rate but weakens by 3,75% each year for the next 5 years- Calculate the all-in cost of each bond issue
under each scenario and describe the impact of un-hedged currency exposure on the all-in cost of the US dollar denominated bond, Euro denominated Eurobond and Euro/US
dollar dual currency Eurobond.

FOR YOUR ASSIGNMENTS TO BE DONE AT A CHEAPER PRICE PLACE THIS ORDER OR A SIMILAR ORDER WITH US NOW