Response to the following:
1. Risk from Issuing Foreign Currency-Denominated Bonds
What is the advantage of using simulation to assess the bond ?nancing position?
2. Exchange Rate Effects
a. Explain the difference in the cost of ?nancing with foreign currencies during a strong-dollar period versus a weak-dollar period for a U.S. ?rm.
b. Explain how a U.S.-based MNC issuing bonds denominated in euros may be able to offset a por- tion of its exchange rate risk.