Match the items of List – I with the items of List – II. List-IList-II (a) Euro Dollar (i) a bond sold…
A Euro Dollar is a US dollar deposited in a bank outside the United States (a-iv); a Foreign Bond is sold by a foreign borrower in the domestic currency of the country where…
Choose your answer
Match the items of List – I with the items of List – II.
| List-I | List-II |
|---|---|
| (a) Euro Dollar | (i) a bond sold by a foreign borrower but denominated in the currency of the country in which it is sold. |
| (b) Foreign Bond (ii) a bond sold in a country other than the one in whose currency the bond is denominated. | (iii) the situation when the spot rate is greater than the forward rate. |
| (c) Euro Bond | (iv) a US dollar deposited in a bank outside the United States. |
| (d) Premium on Forward Rate |
Answer and explanation
Correct answer A
A Euro Dollar is a US dollar deposited in a bank outside the United States (a-iv); a Foreign Bond is sold by a foreign borrower in the domestic currency of the country where it is sold (b-i); a Euro Bond is sold in a country other than the one in whose currency it is denominated (c-ii); and a forward rate premium/discount relates the spot rate and forward rate (d-iii), matching -(iv), (b)-(i), (c)-(ii), (d)-(iii).
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UGC NET Management