CFA CFA Level 1 Question of the Week – Fixed Income

Question of the Week – Fixed Income

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    • Avatar of AdaptPrepAdaptPrep
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        The Kenyan government issues two new series of 10-year optionless bonds. They are completely identical, except that one is denominated in Kenyan Shillings (KES) and the other in British Pounds (GBP). Which offering will most likely be given a higher rating by Moody’s?

        • Kenyan Shillings
        • British Pounds
        • Both will be the same
      • Avatar of AdaptPrepAdaptPrep
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          It is more risky for a government to pay off a debt in a
          foreign currency than in their own. The Kenyan government could pay off its KES
          issue off by printing new money. A KES
          issue will be given a higher credit rating, though British investors may
          experience high currency risk.

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