Question

1. A German company issues bonds denominated in euros that are sold to investors in Germany. These bonds can best be described as:

Eurobonds	global bonds
foreign bonds	None of the above

1. The purpose of amortizing a bond’s principal over the life of the bond is to:

mitigate credit risk	make it hard to repay
lower the tenor of the bond	None of the above

Answer 1

1:Option d

A euro bond is an international bond that is denominated in a foreign currency.

Global bond is issued in many countries simultaneously.

Foreign bond is issued by a foreign borrower in the domestic currency of the country in which it is issued.

Hence the given description is none of the above.

2: Option D

Amortizing the loan means bringing down the principal over the life of the loan.

This will not reduce the credit risk in any manner since it is just accounting for the amortization. It will not make it harder to repay since again this is only an accounting process. It also will not reduce the tenure of the loan.