Response to the following:
1. Currency Diversi?cation:
Why would a U.S. ?rm consider issuing bonds denominated in multiple currencies?
2. Financing That Reduces Exchange Rate Risk:
Kerr, Inc., a major U.S. exporter of products to Japan, denominates its exports in dollars and has no other international business. It can borrow dollars at 9 percent to ?nance its operations or borrow yen at 3 percent. If it borrows yen, it will be exposed to exchange rate risk. How can Kerr borrow yen and possibly reduce its economic exposure to exchange rate risk?