Eurodollars are time deposits with fixed maturities, which make them somewhat illiquid. They may offer the borrower a lower interest rate than can be received in the domestic market. However, Eurodollars are not limited to London banks, as they can be held by banks outside of Europe that accept deposits denominated in U.S. Dollars. Therefore, option D is incorrect.

Solved

Eurodollars

Question 37

Multiple Choice

Eurodollars

A) are time deposits with fixed maturities and are, therefore, somewhat illiquid.
B) may offer the borrower a lower interest rate than can be received in the domestic market.
C) are limited to London banks.
D) are all of the above.
E) are only A and B of the above.

Correct Answer: