Question

“ Aleeza Co. is a U.S company that has a subsidiary in India. It is issued...

“ Aleeza Co. is a U.S company that has a subsidiary in India. It is issued bonds in the United States that are dominated in Indian rupees. The funds from the bonds’ sale will be used by its subsidiary to expand.”

Namely type of this bond? what are TWO advantages buying international bonds?

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Answer #1

Bond issued in the United states is know as Rupee denominated bond(Masala Bond).RDB is a bond issued by an Indian entity in foreign markets and the interest payments and the interest payments are denominated in rupees.

Two advantages buying international bonds are:

i)Increase diversification of an investment portfolio:Foreignbonds may help reduce exposure to economic or pollitical instability in a specific country and can improve a portfolio's risk profile.

ii)Hedge against a weak or falling U.S. dollar:When a foreign currency is strong compared to the dollar,your returns increase because your foreign earning convert into more dollars.

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