Which of the following statements is true about Eurodollar deposits?

Eurodollar deposits refer to U.S. dollar-denominated deposits held in banks located outside the United States. These deposits are not subject to U.S. banking regulations and are instrumental in international finance, often used by global corporations and financial institutions.

The statement that Eurodollar deposits are always denominated in U.S. dollars is accurate because the defining characteristic of Eurodollars is their denomination in U.S. currency, regardless of where the deposit is held. This feature is what distinguishes Eurodollar deposits from domestic deposits held in foreign currencies or local currencies. Since Eurodollars are specifically U.S. dollar deposits outside the U.S., all Eurodollar activities inherently involve dollars as opposed to other currencies.

The other statements, while they may reflect common misconceptions, do not accurately describe Eurodollar deposits. For example, Eurodollar deposits do not need to be converted to local currency upon deposit, as they are maintained in U.S. dollars regardless of the bank's geographic location. Additionally, these deposits can be held in banks around the globe, not exclusively in Europe. Finally, while it's common for Eurodollar deposits to offer competitive rates, the interest rates can vary depending on market conditions rather than a strict rule that they always have higher