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

$7\mathrm{.}75\%,$ even though a comparable fixed$-$rate Euroyen bond at that time carried only a

$6\mathrm{.}375\%$ coupon. The actual $5-$year forward rate at the time was around JPY$/$USD $200.$

a$.$ Given the $$fat$$ coupon, is this bond necessarily a great deal for investors?

b$.$ At maturity in August $1990,$ the spot exchange rate was JPY$/$USD $144.$ Was the bond

a good deal for investors assuming the position was unhedged?

c$.$ What was the actual IRR on the investment?