A portfolio manager heard recently that Apple is looking to issue a fixed coupon 5 years corporate bond in UK in GBP. The manager is interested in buying this bond, but he is worried that the FED may hike rates which will strengthen the dollar against all the other currencies. What can the mortfolio manager do to hedge these risks if he goes ahead and buys the Apple bond?

A portfolio manager heard recently that Apple is looking to issue a fixed coupon 5 years corporate bond in UK in GBP. The manager is interested in buying this bond, but he is worried that the FED may hike rates which will strengthen the dollar against all the other currencies. What can the mortfolio manager do to hedge these risks if he goes ahead and buys the Apple bond?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter18: Long-term Debt Financing

Section: Chapter Questions

Problem 4ST

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