Question: The Bloomberg website provides interest rate data for many countries and various maturities. Its address is http://www.bloomberg.com . Go to the Markets section and then

The Bloomberg website provides interest rate data for many countries and various maturities. Its address is http://www.bloomberg.com.

Go to the Markets section and then to Bonds and Rates. Assume that an MNC would pay 1 percent more on borrowed funds than the risk-free (government) rates shown at the Bloomberg website. Determine the cost of debt (use a 10-year maturity) for the U.S. parent that borrows dollars. Click on Japan and determine the cost of funds for a foreign subsidiary in Japan that borrows funds locally. Then click on Germany and determine the cost of debt for a subsidiary in Germany that borrows funds locally. Offer some explanations as to why the cost of debt may vary among the three countries.

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