Compare and contrast the financial instruments, risks, and rewards of investing in the international bond markets and international equity markets.

Financial instruments that are used to invest in international bond markets and international equity markets vary greatly. In the international bond market, investors will typically purchase bonds issued by foreign governments or corporations. These bonds may be fixed rate or variable rate, denominated in a local currency such as the euro or yen, and generally have a maturity of several years. The risks associated with investing in these instruments include changes in interest rates (if variable), exchange rate fluctuations, and credit risk if the issuer defaults on their obligation to pay back the principal plus any interest payments due over time. The rewards associated with investing in these instruments can include regular coupon payments (if fixed) as well as capital appreciation if interest rates fall during the life of the bond.

The financial instruments used to invest in international equity markets typically consist of stocks from foreign companies listed on exchanges outside of one’s home country. These investments expose investors to exposure to different economic cycles than those found at home as well any potential tax advantages offered by listing on an overseas exchange. Risks for this type of investment can include volatility due to broader economic conditions across different countries (which are often correlated but still subject to differing dynamics). Rewards can come from both capital appreciation and dividends received when holding shares of stock over time.

Overall, each type of investment carries its own unique set of risks and rewards which must be carefully evaluated before making an informed decision about which avenue is best suited for one’s individual needs and goals.