1.

What is an advantage of Eurocurrency loans relative to Eurobonds?

Select one:

a.

Eurocurrency loans can have fixed or variable rates, Eurobonds can only have variable rates.

b.

Eurocurrency loans are generally larger in size than Eurobonds.

c.

Eurocurrency loans have more flexible terms (e.g. repayment schedules) than Eurobonds.

d.

Eurocurrency loans do not have any advantages over Eurobonds.

e.

Eurocurrency loans tend to have longer maturities than Eurobonds.

2.

Which of the following is NOT true regarding issuing foreign debt?

Select one:

a.

If the uncovered interest rate parity holds, there is no benefit of issuing debt in a low-interest country in terms of the borrowing cost.

b.

Issuing loans denominated in foreign currency can expose the issuer to additional exchange rate risk.

c.

If the uncovered interest rate parity does not hold, you can lower the borrowing cost by issuing foreign debt in low-interest countries.

d.

All statements are correct.

e.

If the foreign currency of the low-interest country depreciates, the principal amount translated into the home currency value decreases.