A U S insurance company invests $ 1,000,000 in a private placement of British bonds Each bond pays 300 in interest per year for 20 years If the current exchange rate is 1 564 $, what is the nature of the insurance companys exchange rate risk Specifically, what type of exchange rate movement concerns this insurance company

Question: A U.S. insurance company invests $ 1,000,000 in a private placement of British bonds. Each bond pays 300 in interest per year for 20

A U.S. insurance company invests $ 1,000,000 in a private placement of British bonds. Each bond pays £ 300 in interest per year for 20 years. If the current is £ 1.564/$, what is the nature of the insurance company’s risk? Specifically, what type of movement concerns this insurance company?

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