MNCs May Be Able to Lock in a Lower Cost

question 19

Multiple Choice

MNCs may be able to lock in a lower cost from financing in a low interest rate foreign currency if they:

• A) have future cash inflows in that foreign currency.
• B) have future cash outflows in that foreign currency.
• C) have offsetting future cash inflows and outflows in that foreign currency.
• D) have no other cash flows in that foreign currency.

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Definitions:

Intercompany Land Sales

Transactions involving the sale of land between companies that are part of the same corporate group.

Realized

Pertains to gains or losses that have been converted into actual cash or other equivalents through the sale or completion of a transaction.

Legal Ownership

Refers to the formal and recognized ownership of an asset, property, or entity according to law.

Acquisition Differential

The difference between the purchase price of a company and the fair value of its net identifiable assets.