1. Convergence of interest rates within the Eurozone

Since the introduction of the Euro in Jan 1999, the European Central
Bank has determined monetary policy and the level of interest rates
amongst the member states. Does the ECB do this by issuing a European
benchmark for risk-free interest? Is this the Euribor
(http://www.euribor.org)? If not, what exactly is this mechanism and
please provide data (or a link to a free source) since unification.

Am I correct in assuming that Member states can still issue their own
debt? Presumably market forces would resulting in a convergence of
interest rates. Has this been the case? To demonstrate, please provide
data to enable me construct a yield curve for 90 day bills & 10-year
bonds issued in the 11 original member states from about 1995.

2. Convergence of the weighted average cost of capital

Is it reasonable to assume that convergence of interest rates should
result in a convergence in the cost of equity for firms operating
within the Eurozone? To demonstrate whether equity markets in the
Eurozone are also converging, please provide correlation coefficient
data (or a link to free a source) for equity returns among the
original member countries.

All else being equal, is it reasonable to assume that the weighted
average cost of capital for a European firm has decreased as a result
of the Euro's introduction? What forces are at work?

Are shareholder returns also converging? Please provide data to track
the equity performance of Euroland firms or a Euroland share price
index.

Does 'Country risk' still exist for European firms trading within the
Eurozone?

I need this information for a presentation on the 28 Oct. Answers are
of no value to me after this date.

Thanks,

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Clarification of Question by herbet-ga on 30 Oct 2003 16:16 PST

Surely this question can't be that hard for you Gurus!

I now need an answer by 6th Nov. Please help!

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Clarification of Question by herbet-ga on 31 Oct 2003 17:34 PST

Limiting my requirements to 10-yr bonds, part 1 of my question can be
answered by providing the raw data used to construct the chart on page
6 of this report:
http://www2.oenb.at/tagung/vowi_2002/kf_lf/rede_sinn.pdf

One point that I'm still not clear on: What is the benchmark risk-free
rate of interest? I have seen some sources use both the French and
German 10-yr bond as the benchmark.