Question: In 1989 and 1990, the Japanese company Mitsubishi Estate Co. paid the Rockefeller family $1.4 billion for an 80% stake in New York's Rockefeller center. At the time, the exchange rate was 145 yen/$. When the investor went to sell the building 5 years later, in early 1995, the exchange rate was 85 yen/$ and the property's value had decreased to $800 million.
a) what exchange risk did Mitsubishi Estate face at the time of purchase?
b) How could Mitsubishi have hedged this risk?