Chapter 2.5 International Financial Markets

Question 1

1. Eurocurrency market

Answer 1

• Involve borrowing of funds/depositing funds with a bank outside of the country
• Funds are denominated for a short-term, especially 3 months

Question 2

2. Eurobonds

Answer 2

• Involve borrowing of funds/depositing funds with a bank outside the country
• Funds are denominated for a long-term (10 - 20 years)
• Long-term loans raised by international companies/other institutions
• Sold to investors in several countries
• Must consider the exchange risk of a long-term foreign currency loan