Chapter 12

_ are international bonds, normally underwritten by an international syndicate of banks and placed in countries other than the one in whose currency the bond is denominated.

Eurobonds

Eurobonds are usually offered to residents of the country in whose currency they are denominated.

False

The cost of capital is the difference between cost of inputs and outputs.

False

_ are sold outside of the borrower's country and are denominated in the currency of the country in which they are issued.

Foreign bonds

Banks charge borrowers a lower interest rate on Eurocurrency borrowings than for borrowings in the home currency.

True

The Eurocurrency market has been one cause of a decrease in global financial regulations.

True

The relatively low correlation between the movements of stock markets in different countries indicates that countries face different economic conditions.

True

What makes Eurobonds more attractive than most major domestic bonds?

favorable tax status

The systematic risk of the stock market is the

level of nondiversifiable risk in an economy

The liquidity of the market is _ in a purely domestic capital market.

limited