1) Examine the types of securities being recommended to RJR as financing alternatives in August, 1985. Are they well suited to RJR's current liability structure and overall financing program? Why or why not? What other alternatives might be appropriate?

2) Please analyze the structure and compute the expected cost of each financing alternative proposed here. I see, at least, six alternatives:

The Eurodollar Bond;

The Euroyen Bond hedged with forwards;

The Euroyen Bond hedged with swaps;

The Dual Currency Bond hedged with forwards;

The Dual Currency Bond hedged with a swap of interest payments only;

The Dual Currency Bond with the principal repayment hedged to yen; all yen then

swapped into USD.

3) Assuming RJR were to choose among the alternatives presented in the case, which would you recommend?