Excessive exposure to exchange rate fluctuations

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Reference no: EM131349077

Assume that Hurricane, Inc., is a U.S. company that exports products to the U.K., invoiced in dollars. It also exports products to Denmark, invoiced in dollars. It currently has no cash outflows in foreign currencies, and it plans to issue bonds in the near future. Hurricane could likely issue bonds at par value in (1) dollars with a coupon rate of 12 percent, (2) Danish kroner with a coupon rate of 9 percent, or (3) pounds with a coupon rate of 15 percent. It expects the kroner and pound to strengthen over time. How could Hurricane revise its invoicing policy and make its bond denomination decision to achieve low financing costs without excessive exposure to exchange rate fluctuations?

Reference no: EM131349077

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