Your firm has USD debt outstanding with a nominal value of USD 1m and a coupon of 9 percent, payable annually The first interest payment is due three months from now, and there are five more interest payments afterwards (a) If the yield at par on bonds with similar risk and time to maturity is 8 percent, what is the market value of this bond in USD In Yen (at St JPY USD 100) (b) Suppose that you want to exchange the service payments on this USD bond for the service payments of a 5 25 year JPY loan at the going yield, for this risk class, of 4 percent What should be the terms of the JPY loan

Question: Your firm has USD debt outstanding with a nominal value of USD 1m and a coupon of 9 percent, payable annually. The first interest payment

Your firm has USD debt outstanding with a nominal value of USD 1m and a of 9 percent, payable annually. The first interest payment is due three months from now, and there are five more interest payments afterwards.
(a) If the yield at par on bonds with similar risk and time to is 8 percent, what is the market value of this bond in USD? In Yen (at St = JPY/USD 100)?
(b) Suppose that you want to exchange the service payments on this USD bond for the service payments of a 5.25-year JPY loan at the going yield, for this risk class, of 4 percent. What should be the terms of the JPY loan?

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