Question

A Japanese firm issued and sold a pound denominated bond in the United Kingdom. A U.S. firm issued bonds denominated in dollars but sold the bonds in Japan. Which one of the following statements is correct?A. Both bonds are examples of Eurobonds.
B. The Japanese bond is a Eurobond and the U.S. bond is termed a foreign bond.
C. The U.S. bond is a Eurobond and the Japanese bond is termed a foreign bond.
D. Neither bond is a Eurobond.

Answer 1

The U.S. bond is a Eurobond and the Japanese bond is termed a foreign bond.

Answer: Option C

Explanation:

The bond that has been issued by the firm in the United States of America is denominated in the US dollars only. But it is sold in Japan. So this bond is a Euro bond.

But since the bond issued by the Japanese firm is denominated in pounds. And this pound denominated bond is also sold in the United Kingdom, therefore this bond is a foreign bond and not a euro bond.