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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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. This is because the exchange rate between the foreign currency and the domestic currency can fluctuate, leading to changes in the interest rate and other financing costs of the foreign bond when measured in domestic currency terms.

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