CMA Intermediate · Financial Management and Business Data Analytics · Sources of Finance
An Indian company raises funds by issuing bonds in the international market, denominated in a currency other than the currency of the country where they are issued and sold across several countries at once. Which of the following best describes such an instrument?
The instrument is a Eurobond. It is a debt security denominated in a currency other than that of the country or market in which it is issued, and it is placed with investors in several countries at the same time.
- AEuro bondCorrect
- BMasala bond
- CCommercial paper
- DTreasury bill
Explanation
A Eurobond is a debt instrument denominated in a currency different from that of the market where it is issued, and it is sold internationally. Masala bonds are rupee-denominated bonds issued outside India, so the currency differs from the Eurobond definition. Commercial paper and treasury bills are domestic money market instruments.
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