Get premium membership and access questions with answers, video lessons as well as revision papers.

Give factors to consider when choosing between Euromarkets or Domestic Markets.

Highlight the factors to consider when choosing between Euromarkets or Domestic Markets.

Answers

(i) Timing and speed.
It may be possible to raise money on the Euromarkets more
quickly than in the domestic markets.

(ii) Security; Euromarkets loans are usually unsecured, whereas, domestic market loans
are more commonly secured. Large borrowers may therefore prefer Euromarkets.

(iii) The size of the loans.
It is often easier for a large multinational to raise very large
sums on the Euromarkets than in a domestic financial market.

(iv) The currency that the borrower wants to obtain Multinational companies usually want
to borrow in foreign currency to reduce their foreign exchange exposure and therefore
borrow in Euromarkets rather than the domestic market.

(v) The cost.
There is often a small difference in interest rate between Eurocurrency and
domestic markets. On large borrowings, however, even a small difference in interest
rate result in a large difference in the total interest charged on the loan.

maurice.mutuku answered the question on April 25, 2019 at 07:40

Next: Name the process where propane gas molecules are converted to a giant molecule
Previous: Outline the reasons for timely cultivation

View More International Finance Questions and Answers | Return to Questions Index

Learn High School English on YouTube

Give factors to consider when choosing between Euromarkets or Domestic Markets.

Answers

Related Questions