If an MNC Finances with a Currency Different from Its

question 31

Multiple Choice

If an MNC finances with a currency different from its invoice currency, it would prefer that the loan be denominated in a currency that:​

• A) ​exhibits a low interest rate and is expected to appreciate.
• B) ​exhibits a low interest rate and is expected to depreciate.
• C) ​exhibits a high interest rate and is expected to depreciate.
• D) ​exhibits a high interest rate and is expected to appreciate.

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Definitions:

Dividend

A corporation's distribution of earnings to its shareholders, usually made as a payment.

Soybean Future

A contractual agreement for the future delivery of soybeans at a predetermined price, used for hedging and speculating in the commodities market.

Wheat Spot Price

The current price at which wheat can be bought or sold for immediate delivery.

Loss

A decrease in monetary value, often referring to the difference between the purchase price and the lower selling price of an asset.