In $1985,$ R$.$J$.$ Reynolds $($RJR for short$)$ acquired Nabisco Brands and financed the deal with a variety of financial instruments, including three dual$-$currency Eurobonds. The first dual$-$currency bond, lead$-$managed by Nikko, raised JPY$25$ billion $($which was equivalent to USD$105\mathrm{.}5$ million at the time of issue$).$ Coupons were paid in yen, but the required final principal payment

was not JPY$25$ billion but USD$115\mathrm{.}956$ million. The coupon was $7\mathrm{.}50\%$ even though a comparable fixed$-$rate Euroyen bond at that time carried only a$6\mathrm{.}375\%$ coupon.

a$.$ Given the $$fat$$ coupon, is this bond necessarily a great deal for the investors? Assume that investors could now enter into a contract to buy JPY in $5$ years at the rate of JPY$200/$USD$.$This contract would allow the Japanese investor to not worry about future movements in the JYP$/$USD exchange rate.

b$.$ At maturity, in August $1990,$ the exchange rate was actually JPY$144/$USD$.$ Was the bond a good deal for investors?