Dual Currency Bonds

One of the interesting things about bonds is that actually the currency of the coupon can be different to that of the redemption.

Indeed this you might come to have worked out is known as a dual currency bond, for the obvious reason.

So to make this explicit, it could be the case that the bond pays a coupon in pounds sterling, whilst the redemption takes place in dollars.

This means that there is a rate of exchange involved in the bond, and this can be laid out right at the start when the bond is issued, or as another option it can be the spot rate at the time of the particular transaction taking place.

There can even be a variety of currencies involved which are decided by the issue or holder or both, so there really are lots of options when it comes to the currencies of bonds and different elements of the bonds to consider!

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