Reducing the Amount of Borrowing Denominated in the Currency of the Foreign

question 46

True/False

Reducing the amount of borrowing denominated in the currency of the foreign subsidiary is a method of reducing the long-run exposure risks of foreign exchange.

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Definitions:

Immediate Costs

Expenses that are directly incurred and need to be paid out in the short term.

Uncertain Benefits

Refers to potential advantages or gains from an investment or action that cannot be precisely predicted or quantified.

Production Cost

The total expense incurred in manufacturing a product or providing a service, including raw materials, labor, and overhead.

Expected Rate Of Return

A calculation representing the probable return on an investment, accounting for the risk of different investment options and the likelihood of various outcomes.