The two key financial instruments used in the Eurocurrency markets are:
A)foreign exchange swap agreements and Euro commercial paper.
B)Euro commercial paper and Euro certificate of deposit.
C)Euro certificate of deposit and Euro negotiable instruments.
D)Euro negotiable instruments and foreign exchange swap agreements.

Question

Quizplus · Accepted Answer

Euro commercial paper and Euro certificates of deposit are the two key financial instruments used in the Eurocurrency markets. Euro commercial paper is a short-term debt instrument with a maturity of up to 270 days, issued by corporations to raise funds in the Eurocurrency markets. Whereas, Euro certificate of deposit is a time deposit issued by banks in the Eurocurrency markets for a fixed period of time at a specified interest rate. These financial instruments are used to manage cash flows, reduce currency risk, and finance international trade, among other purposes.

The Two Key Financial Instruments Used in the Eurocurrency Markets