Suppose the average interest rate on euro bonds is 4% and the average interest rate on U.S. dollar bonds is 6%. Which should the investor choose? The euro bond, because European economies are usually more stable Neither, because bonds have high default rates in both countries. Both, because an investor will choose some euro bonds and some U.S. bonds to diversify O It is not possible to answer without information on exchange rates.
Suppose the average interest rate on euro bonds is 4% and the average interest rate on U.S. dollar bonds is 6%. Which should the investor choose? The euro bond, because European economies are usually more stable Neither, because bonds have high default rates in both countries. Both, because an investor will choose some euro bonds and some U.S. bonds to diversify O It is not possible to answer without information on exchange rates.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter6: Managing In The Global Economy
Section: Chapter Questions
Problem 6E
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