BAFI3273 Week 5 International debt market

Borrowers may access the international debt markets if:

• They have a low credit rating and no regulatory oversight.
• They are located in a country with high inflation rates.
• They have a history of defaulting on loans.
• They have a strong credit rating and meet regulatory requirements.

The international market for common stock in comparison with international debt market:

• The international stock market guarantees fixed returns like the debt market.
• Investing in international stocks is always safer than investing in international debt.
• The international stock market is more volatile and offers higher potential returns compared to the international debt market, which is generally safer with fixed returns.
• The international debt market is more volatile than the stock market.

Size of the global equity market in comparison with size of the global credit market:

• Both markets are of equal size.
• The international market for equity is smaller than the international credit market.

• The international market for common stock is larger than the international debt market.

A major reason for the ongoing growth of the euromarkets is:

• High interest rates in domestic markets.
• Increased government intervention in financial markets.
• Limited access to international investors.
• Regulatory advantages and flexibility in capital raising.

Costs faced by banks in the euromarket operations tend to be:

• equal to those in domestic markets
• higher than those in domestic markets
• lower than those in domestic markets
• unpredictable and variable across regions

The generally lower default risk of eurocurrency loans is a result of the fact that:

• Higher interest rates on loans
• Unsecured personal loans
• Increased regulatory requirements
• loans are made to medium-to-large corporations and governments

In the international financial market, euronote is:

• A long-term equity investment in the eurocurrency market.
• A long-term international security paying interest annually

• A short-term international security paying interest semi-annually

• A short-term international security discounted at less than face value

An eurobond is:

• A bond that can only be traded within the issuing country.
• A type of stock that represents ownership in a company.
• A bond issued by a government in its own currency.
• A bond issued in a currency not native to the country of issuance.

What is a primary advantage of investing in eurobonds?

• They are issued in the investor's local currency.

• They have lower liquidity compared to domestic bonds.

• They typically offer higher yields than domestic bonds.

• They are guaranteed by the issuing government.

The higher the credit rating given to a bond issue:

• The higher the credit risk

• The higher the yield

• The lower the yield

• The higher the country risk