MNCs Can Use Short-Term Foreign Financing to Reduce Their Exposure

question 48

Multiple Choice

MNCs can use short-term foreign financing to reduce their exposure to exchange rate fluctuations. For example, if an American-based MNC has ____ in euros, it could borrow ____, resulting in an offsetting effect.

• A) payables; euros
• B) receivables; euros
• C) payables; dollars
• D) receivables; dollars

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Definitions:

Prototype

An example that embodies the most common and typical features of a concept.

Natural Concept

A concept acquired not from a definition but through everyday perceptions and experiences.

Inductive

A reasoning process that involves making generalizations based on specific observations or examples.

Deductive

A logical process in which a conclusion follows necessarily from the stated premises; inference by reasoning from general to specific.