Dual Currency Bond
Well, a currency duel would be way cooler.
Two bonds. One dusty road in the wild west. A saloon. A girl. And a gun.
Blam! Re-tired. Er…called. Er…paid. Whatever they call bonds when they're dead.
Anyway, a dual currency bond is a bond where the principal and the interest payments are made in different currencies. Like...you have a bond whose principal is paid off in U.S. dollars, but its interest is paid in euros. And yeah, whatever currency being used for interest payments is called the “base currency.”
Why would you, the investor…want one of these things?
Well, dual currency bonds are subject to exchange rate risk. In other words, you’re making a gamble not just on an investment, but on which way the exchange rate will…bounce. If the repayment currency appreciates, boom, you’re in the money. If not…well, there’s always bank robbery as a last resort…
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Finance: What is a Dual Currency Bond?33 Views
Finance allah shmoop what is a dual currency bond Well
a currency duel would be way cooler to bonds One
dusty road in the wild west a saloon a gal
and a gun plan retired or called are paid whatever
they call bonds when they're dead Anyway a duel currency
bond is a bond where the principal and the interest
payments are made in different currencies like here's a bond
whose principal is paid off in u s dollars But
its interest is paid in euros and yeah whatever currency
being used for interest payments is called the base currency
Well why would you the investor of want one of
these things Well dual currency bonds or subject to exchange
rate risk In other words you're making a gamble not
just on an investment but on which way the exchange
rate will bounce That is if you own something it's
highly exposed two euros while then you're kind of making
a bet that the relative to the dollar the euro
zehr gonna appreciate mohr like the government's printing less of
them You have less inflation whatever because then if that
repayment currency appreciates well boom you're more in the money
Than just the interest you collected And if that currency
doesn't appreciate well there's always bank robbery is a last 00:01:21.189 --> [endTime] resort dual currency dueling currencies No