Which statement correctly defines a domestic bond?

Which statement correctly defines a domestic bond?

• A. Domestic bonds are issued by domestic issuers in the domestic currency.
• B. Domestic bonds are issued by foreign issuers in the domestic currency.
• C. Domestic bonds are issued in foreign currency by domestic issuers.
• D. Eurobonds are issued by foreign issuers in foreign currency.

Answer: (A)

A domestic bond is defined by who issues it and in what currency. If the issuer is based in the same country as the market and the bond is issued in that country’s currency, it’s a domestic bond. That matches the statement because it says “issued by domestic issuers in the domestic currency.” For example, a UK company issuing a bond in pounds in the UK is a domestic bond. If a foreign issuer issues in the domestic currency, that’s a foreign bond, not domestic. If a domestic issuer issues in a foreign currency, that would be a bond in a foreign currency, not a domestic bond. Eurobonds are typically issued outside the issuer’s home market and often in a currency different from the home currency, so they’re not the same as domestic bonds.

A domestic bond is defined by who issues it and in what currency. If the issuer is based in the same country as the market and the bond is issued in that country’s currency, it’s a domestic bond. That matches the statement because it says “issued by domestic issuers in the domestic currency.” For example, a UK company issuing a bond in pounds in the UK is a domestic bond.

If a foreign issuer issues in the domestic currency, that’s a foreign bond, not domestic. If a domestic issuer issues in a foreign currency, that would be a bond in a foreign currency, not a domestic bond. Eurobonds are typically issued outside the issuer’s home market and often in a currency different from the home currency, so they’re not the same as domestic bonds.