INTERNATIONAL DEBT INSTRUMENTS

• Indira Gandhi National Open University (IGNOU) has extended the last day of submission of IGNOU Assignments for session June 2020 to 31st May 2020. Candidates who are facing problem in making assignments here is the solution to your problem.

Master of Commerce – M.Com First Year Solved Assignments for July 2019 and January 2020 Admission Cycles

M.COM First Year Tutor Marked Solved Assignment

Course Code: IBO – 06
Course Title: International Marketing Logistics
Assignment Code: IBO-06/TMA/2019-20
Coverage: All Blocks

IBO – 06 International Business Finance Solved Assignment for 2019-20

Q1.) (b.) What are the various types of international debt instruments? Explain any two of them.

Ans: A debt instrument is a tool an entity can utilize to raise capital. It is a documented, binding obligation that provides funds to an entity in return for a promise from the entity to repay a lender or investor in accordance with terms of the contract. Debt instruments are tools an individual, government entity, or business entity can utilize for the purpose of obtaining capital.

Various types of international debt instruments are: 

Euro Notes, Euro Commercial Paper, Medium Term Notes, Floating Rate Notes, and Euro Bonds.

Euro Notes: Euro Notes are like promissory notes issued by companies for obtaining short term funds. They are denominated in any currency other than the currency of the country where they are issued. They represent a low-cost funding route. The Euro notes carry three main cost components: Underwriting fee, One time management fee for structuring, pricing and documentation; and Margin on the notes themselves.

Euro Commercial Papers: Another form of short term debt instrument that emerged during the mid-1980s came to be known as Euro Commercial Paper. It is a promissory note like the short term Euro notes although it is different from Euro notes in some way. ECP came up on the pattern of domestic market commercial papers that had a beginning in the USA and then in Canada. The detailed feature of ECPs varies from one country to another. They involve market-based interest rates, LIBOR. The ECPs are issued either in interest-bearing form or in a discounted form with interest built in the issue price itself.