Eun/Resnick 4e 143Eun & Resnick 4eCHAPTER 12 International Bond MarketThe Worlds Bond Markets: A Statistical PerspectiveForeign Bonds and EurobondsBearer Bonds and Registered BondsNational Security RegulationsWithholding TaxesOther Recent Regulatory ChangesGlobal BondsTypes of InstrumentsStraight Fixed-Rate IssuesEuro-Medium-Term NotesFloating-Rate NotesEquity-Related BondsZero-Coupon BondsDual-Currency BondsCurrency Distribution, Nationality, and Type of IssuerInternational Bond Market Credit RatingsInternational Finance in Practice: Heineken Refreshes Euromarket with Spectacular Unrated BondsEurobond Market Structure and PracticesPrimary MarketSecondary MarketClearing ProceduresInternational Bond Market IndexesSummaryMINI CASE: Sara Lee Corporations EurobondsThe Worlds Bond Markets: A Statistical Perspective1 In any given year, what percent of new international bonds are likely to be Eurobonds rather than foreign bondsa) 80%b) 45%c) 25%d) 15%Answer: a)Foreign Bonds and Eurobonds2 A “foreign bond” issue is a) one denominated in a particular currency but sold to investors in national capital markets other than the country that issued the denominating currencyb) one offered by a foreign borrower to investors in a national market and denominated in that nations currencyc) for example, a German MNC issuing dollar-denominated bonds to U.S. investorsd) b) and c)Answer: d)Eun/Resnick 4e 1443 A “Eurobond” issue isa) one denominated in a particular currency but sold to investors in national capital markets other than the country that issued the denominating currencyb) usually a bearer bondc) for example a Dutch borrower issuing dollar-denominated bonds to investors in the U.K., Switzerland, and the Netherlandsd) All of the aboveAnswer: d)4 In any given year, rightly 80 percent of new international bonds are likely to bea) Eurobondsb) Foreign currency bondsc) Domestic bondsd) None of the aboveAnswer: a)5 “Yankee” bonds are a) dollar-denominated foreign bonds originally sold to U.S. investorsb) yen-denominated foreign bonds originally sold in Japanc) pound sterling-denominated foreign bonds originally sold in the U.K.d) none of the above.Answer: a)6 “Samurai” bonds are a) dollar-denominated foreign bonds originally sold to U.S. investorsb) yen-denominated foreign bonds originally sold in Japanc) pound sterling-denominated foreign bonds originally sold in the U.K.d) none of the above.Answer: b)7 “Bulldog” bonds are a) dollar-denominated foreign bonds originally sold to U.S. investorsb) yen-denominated foreign bonds originally sold in Japanc) pound sterling-denominated foreign bonds originally sold in the U.K.d) none of the above.Answer: c)Bearer Bonds and Registered Bonds8 A “bearer bond” is one thata) shows the owners name on the bondb) the owners name is recorded by the issuerc) possession is evidence of ownershipd) a) and b)Answer: c)Eun/Resnick 4e 1459 A “registered bond” is one thata) shows the owners name on the bondb) the owners name is recorded by the issuerc) the owners name is assigned to a bond serial number recorded by the issuerd) both a) and b), or c)Answer: d)10 U.S. security regulations require Yankee bonds and U.S. corporate bonds sold to U.S. citizens to bea) Municipal bondsb) registered bondsc) bearer bondsd) none of the aboveAnswer: b)National Security Regulations11 Publicly traded Yankee bonds musta) Meet the same regulations as U.S. domestic bondsb) Meet the same regulations as Eurobonds if sold to Europeansc) Meet the same regulations as Samurai bonds if sold to Japanesed) None of the aboveAnswer: a)12 The Eurobond segment of the international bond market:a) Is roughly four times the size of the foreign bond segment.b) Has considerably less regulatory hurdles than the foreign bond segment.c) Typically has a lower rate of interest that borrowers pay in comparison to Yankee bond financing.d) All of the aboveAnswer: d)Withholding Taxes13 U.S. corporations a) Are allowed to issue bearer bonds to non-U.S. citizensb) Are not allowed to issue bearer bondsc) Are allowed to issue treasury bonds but not T-billsd) None of the aboveAnswer: a)Eun/Resnick 4e 146Other Recent Regulatory Changes14 Shelf registrationa) Allows a set of bookshelves to remain level.b) Allows an issuer to preregister a securities issue, and then “shelve” the securities for later sale.c) Allows an investment bank to increase the fees they charge by charging for storage of the “shelved” securitiesd) Eliminates the information disclosure that many foreign firms found objectionable in the foreign bond market.Answer: b)15 Rule 144Aa) Allows qualified institution investors in the United States to trade private placements. b) Was designed to make the U.S. capital market more competitive with the Eurobond market.c) Primarily, but not exclusively, impacts Yankee bonds.d) All of the above.Answer: d)Global Bonds16 A “global bond” issuea) is a very large international bond offering by several borrowers pooled togetherb) i