Question

What are the benefits of Eurobonds to the issuers (please select all that apply)?

Reducing Exchange Rate Risk

Offering Flexibility to Choose The Favorable Interest Rate

Increasing The Investor Base

Helping with Targeting A Specific Market

Answer 1

Eurobonds are issued in a currency other than the local currecncy.

Example: A U.S. dollar denominated bond issued in Japan is a Eurobond.

The benefits of Eurobonds to the issuers include:

• Reducing Exchange Rate Risk. The issuer in the U.S. does not bear the exchange rate risk because the bonds are issued in the U.S. dollar.
• Increasing The Investor Base. Eurobonds can be issued in many countries and this increases investor base.
• Helping with Targeting A Specific Market. As Eurobonds can be issued in any country, the issuer gets access to a particular market.

Offering Flexibility to Choose The Favorable Interest Rate. This is incorrect. There is flexibility in issuing different maturity but not the flexibility to choose the favourable interest rate.

Can you please upvote? Thank you :-)