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International Financial Management

International Financial Management I) Int’l Capital Market A) Euro $ market a. Euro $ : b. Origin:1) Soviet Union deposited $ at U.K. bank 2) U.K. bank started to provide $ loan * The market continues to grow. Why? c. Interest rate structure

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International Financial Management

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  1. International Financial Management I) Int’l Capital Market A) Euro $ market a. Euro $ : b. Origin:1) Soviet Union deposited $ at U.K. bank 2) U.K. bank started to provide $ loan * The market continues to grow. Why?

  2. c. Interest rate structure Domestic Borrowing rate Euro borrowing rate Domestic Euro spread spread Euro saving rate Domestic saving rate

  3. d) Reasons for narrow spread : 1) 2) a. b. e) Base rate:LIBOR(London InterBank Offer Rate) f) Players: Borrower: Lender:

  4. 2) International Bond Market a. Foreign Bond International Bond denominated in the currency where the bond is issued. * b. Euro Bond International Bond denominated in the currency other than the currency where the bond is issued. * • Euro $ bond ($ bond sold outside of US) market continuously prospers. Why?

  5. Advantages of Euro $ Bond ($ bond issued in foreign country) 1) 2) 3) 4)

  6. 3) International Equity Market A) Direct listing in other country’s market. Advantage of International Equity Firms: 1. 2. 3. 4. Investors : 1. 2. B) Depository Receipt:

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