The Bloomberg Web site (www.bloomberg.com) provides interest rate data for many countries and various maturities....
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The Bloomberg Web site (www.bloomberg.com) provides interest rate data for many countries and various maturities. Go to the Market Data section and then click on Rates and Bonds. Assume that an MNC would pay 1 percent more on borrowed funds than the risk-free (government) rates shown on the Bloomberg Web Site. Determine the cost of debt (use a 10-year maturity) for the U.S. parent that borrows dollars. Click on Japan and determine the cost of funds for a foreign subsidiary in Japan that borrows funds locally. Then click on Germany and determine the cost of debt for a subsidiary in Germany that borrows funds locally. Offer some explanations as to why the cost of debt may vary among the three countries.
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