A Negative Effective Financing Rate Indicates That an MNC

question 32

Multiple Choice

A negative effective financing rate indicates that an MNC:

• A) paid only a small amount in interested over and above the amount borrowed.
• B) has been negatively affected by a large appreciation of the foreign currency.
• C) actually paid fewer dollars to repay the loan than it borrowed.
• D) would have been better off borrowing in the U.S.

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Definitions:

Payment Interval

The regularity with which payments are dispensed, for instance, on a monthly, quarterly, or yearly basis.

Compounded Quarterly

Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan, done four times a year.

Future Value

An asset or cash's future worth that is equal to a designated sum in the present day.

Savings Plan

A strategic approach to setting aside a portion of one's income for future use or emergencies.