Should corporations issue bonds in countries where they face the lowest credit spreads? Be very specific about the concept of credit spread you use
What will be an ideal response?
The answer here is potentially yes. When expressed in a multiplicative sense (by dividing one plus the interest rate the company faces by one plus the rate on a comparable risk-free government bond), lower credit spreads do indeed translate into lower borrowing costs, provided the company can cheaply hedge the cash flows involved into its desired borrowing currency .
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What are the effects on a company's balance sheet if it were to issue a bond and hold the proceeds in cash?
a) its liabilities increase b) its assets increase c) its equity increases d) its book value increases e) its market value increases
When sending text message to a coworker, you should not expect a quick response
Indicate whether the statement is true or false.