Which of the Following Statements Is True of Foreign Bonds

question 107

Multiple Choice

Which of the following statements is true of foreign bonds?

• A) Such bonds must be underwritten by an international syndicate of banks.
• B) Foreign bonds are placed only in the originating country.
• C) Foreign bonds are issued by governments rather than corporations.
• D) Such bonds are denominated in the issuing country's currency.

Identify misconceptions related to the natural rate of unemployment.

Appreciate the challenges policymakers face in reducing the natural rate of unemployment.

Grasp the inevitability of unemployment in a complex economy.

Understand the relationship between full employment and a country's GDP.

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Definitions:

Unbiased Forward Rates

Financial theory suggesting that forward exchange rates should be an unbiased predictor of future spot exchange rates.

Covered Interest Arbitrage

An investment strategy that involves exploiting the interest rate differential between two countries while using forward contracts to hedge against currency risk.

Eurobonds

International bonds issued in a currency not native to the country where it is issued, allowing companies to raise capital in a foreign currency.

International Bonds

Bonds issued in a country by a non-domestic entity, allowing investors to gain exposure to foreign markets.