Legal and tax environment tax impacts directly to

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Legal and tax environment - Tax impacts directly to your product costs or net profits i.e. “the bottom line” for which the whole story is written. International finance manager will look at the taxation structure to find out whether the business which is feasible in his home country is workable in the foreign country or not. Q3. How does the deposit-loan rate spread in the Eurodollar market compare with the deposit- loan rate spread in the domestic U.S. banking system? Why? Answer : - The deposit-loan spread in the Eurodollar market is narrow than in the domestic U.S. banking system. - That is, in the Eurodollar market the deposit rate is greater than the deposit rate of dollars in the U.S. banking system and the lending rate is less. - The Eurodollar market can operate at a lower cost than can the U.S. banking system because it is not subject to Federal Reserve Bank reserve requirements on deposits or FDIC deposit insurance . Q4. Describe the differences between foreign bonds and Eurobonds. Also discuss why Eurobonds make up the lion’s share of international bond market. Answer: - A foreign bond issue is one offered by a foreign borrower (e.g. US borrower) to investors in a national capital market (e.g. Malaysian investors) and denominated in that nation’s currency (MYR).
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