MNCs Can Use ____ to Reduce Exchange Rate Risk

question 49

Multiple Choice

MNCs can use ____ to reduce exchange rate risk. This occurs when two parties provide simultaneous loans with an agreement to repay at a specified point in the future.

• A) forward contracts
• B) currency swaps
• C) parallel loans
• D) none of the above

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Definitions:

Statement of Cash Flows

A financial overview showing the cumulative cash inflows from a company's daily operations and investment receipts, against the total cash outlays for operational and investment expenditures during a nominated period.

Financing Activity

Transactions between a business and its financiers, such as issuing stock, paying dividends, or borrowing from lenders, reflecting the flow of cash used to fund the company's operations and expansions.

Manufacturing Equipment

The machinery and tools used in the process of producing goods, often considered a capital expense by companies.

Operating Activities

These refer to the primary revenue-generating activities of a business, such as sales of goods or services, and related expenses.