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Sony (Japan) is considering a bond issue. For convenience we will consider 3 year maturity $ 1,000 per bond. Questions 27-32 and issue size of $ 1,000,000 The underwriting fees are 4% of par. Issue price is Coupon size is $ 100/year (paid annually). decimals or more before rounding): Annual Swap rates versus six-month USS LIBOR USD decimali or more de gwap or 2) using Yen-$ forwards. ind the following (use Receive Rate % 11.95 6.30 7.40 Pay rate % 11.8 Euro 6,00 7.10 Foreign Currency Forward Rates. Yen per USD. Hint: Subtract points Spot Points 1 year Points 2 year Points 3 year Points 4 year Bid 254.10 7.25 18.50 30.00 40.50 Offer 254.20 6.95 15.50 26.50 36.00 27) IRRs for the bond holders is a)10% b) 11.17% c) 11.66 d) 12.38% d) 1.03% e) none of the above are within +/-0.01. 28) IRRs for Sony (without any hedging) is: a) 10% b) 1 1.17% c) 11.66% d) 12.38% e) none of the above are within +/-001 29) The dollar amount of the 'notional principal' for a Yen-$ swap in (thousands of $) is a) $ 956.6 b)$ 969.50 c) $ 953.1 d) $ 1,000.00 e) none of the above are within-0.01 30) The yen amount of the 'notional principal' for a yen-$ swap in (millions of Yens) is a) Yen 242.19 b) Yen 243.17 c) Yen 246.45 d) Yen 24.219 e) none of the above are within +- 0.01 31) IRRYEN for Sony, with Yen-$ swap is a) 6.79% b) 6.82% c) 7.28% d) 7.72% e) none of the above are within +/-0.01. 32) IRRYEN for Sony, with Yen-S forwards is a) 6.79% b) 6.82% c) 7.28% d) 7.72% e) none of the above are within +/-0.01

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