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Please help me answer this question. Thank you very much!! By Ben Aris in Berlin March 12, 2020 The yield on Ukraine's 2028 dollar denominated
Please help me answer this question. Thank you very much!!
By Ben Aris in Berlin March 12, 2020 The yield on Ukraine's 2028 dollar denominated Eurobonds surged 147bps to 10.91% on MArch 12, effectively shutting the country out of the international capital markets as it faces more than $5bn of debt repayments this year. "Effectively, Ukraine is now excluded from international finance. It took President Zelenskiy one day (March 4) to undo the macroeconomic stabilisation pursued since 2014. Now Ukraine needs the IMF," Anders Aslund, a Swedish economist and a senior fellow at the Atlantic Council, said in a tweet. The rates Ukraine has been charged for international bond placements tumbled in the last year as enthusiasm soared for newly elected President Volodymyr Zelenskiy and his promise of change. Eurobond indicates a bond of which currency is not in home country's currency (i.e. Singapore government issuing a U.S. dollar denominated bond that pays coupon and principal in U.S. dollars). They are essentially the same as any other bonds except that they are in foreign currency. It is mostly used by emerging or shaking countries to attract international investors by offering STRONGER (less volatile value change) currency payments (i.e. U.S. dollars) or firms that need to raise capital in foreign currency due to their international operations. Depending on currencies, it may have many different nicknames. (The name "Euro" has very little to do with Europe. In any fixed income or derivatives market, "Euro" often indicates that the asset has something to do with foreign currency) Which of the following statements are CORRECT? i. If you invest in Eurobonds, typical delta hedging (= immunization with respect to interest rate change) will not suffice due to currency rate risk (FX) ii. Eurobonds issued by emerging countries should have lower yields than equivalent bonds denominated in home currency. iii. Eurobonds issued by emerging countries will be more liquid than equivalent bonds denominated in home currency. iv. Eurobonds issued by emerging countries will have higher duration than equivalent bonds denominated in home currency. O ii, iii and iv O i, iii and iv O i, ii and iv O i, ii andStep by Step Solution
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