If an MNC Borrows in a Foreign Currency and the Value

question 19

Multiple Choice

If an MNC borrows in a foreign currency and the value of that currency appreciates during the term of the loan:

• A)the MNC will not be affected because its obligations are established when the loan is made.
• B)the MNC can cancel the loan and refund the proceeds of the loan.
• C)the MNC will have to repay the principle and interest of the loan in a more valuable currency.
• D)the lender will have the option of canceling the loan.

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Definitions:

Formal Hierarchy

An organized structure where individuals or groups are ranked one above the other according to status or authority.

Equity Allocation

Equity allocation in negotiations refers to the process of distributing resources, rights, or responsibilities among parties in a manner deemed fair or equitable.

Magnitude

The size, extent, or importance of something.

Contribution

The act of giving or supplying something (such as knowledge, materials, or effort) towards a common goal or project.