Question

Which of the following best describes a foreign bond?

A bond issued internationally within the jurisdiction of the country whose currency the bond is denominated.

A bond issued internationally, outside the jurisdiction of the country in whose currency the bond is denominated.

A bond issued by quasi-government securities.

A bond issued by a multilateral agency like the International Monetary Fund.

A bond backed by the full faith and credit of the issuer.

A bond issued whose sources for paying interest often include the cash flows of the project the bond issue is financing or special taxes and fees established for that purpose.

Answer 1

Answer:

OPTION A: A bond issued internationally within the jurisdiction of the country whose currency the bond is denominated.

Reason: If the bond is issued outside the jurisdiction of the country whose currency it is denominated, then it is a EUROBOND, whereas when it is denominated within the jurisdiction of the country whose currency the bond is denominated, then it is a foreign bond. In other words, foreign bonds are those which are issued by a foreign entity outside the country where this foreign entity resides and teh currency in which it is denominated is the currency of the country where the issue is made.

For Example: If Britain issues dollar-denominated bonds in US, they are called foreign bonds (YANKEE bonds)

Example 2: Yen denominated bond issues in Japan by a non Japanese company, is called SAMURAI bonds (foreign bonds)

If you like my explanation, do upvote :)