Generally, the financing costs associated with a foreign currency-denominated bond will be ____ volatile than the financing costs of a domestic bond because of ____.

Question

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The financing costs associated with a foreign currency-denominated bond will be more volatile than the financing costs of a domestic bond because of exchange rate movements. Fluctuations in exchange rates can significantly affect financing costs, which may be magnified for foreign currency-denominated bonds.

Generally, the Financing Costs Associated with a Foreign Currency-Denominated Bond