Multinational Corporations Who Borrow Foreign Currency
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There is some debate on whether Multinational Corporations (MNC's) increase risk when borrowing foreign currencies. Those in favor of borrowing state that lower costs of financing can be achieved and it improves their ability to compete. Those against state that when an MNC borrows a foreign currency, they are essentially speculating on future exchange rate movements. Choose a side and defend your argument
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There is some debate on whether Multinational Corporations (MNC's) increase risk when borrowing foreign currencies. Those in favor of borrowing state that lower costs of financing can be achieved and it improves their ability to compete. Those against state that when an MNC borrows a foreign currency, they are essentially speculating on future exchange rate movements. Choose a side and defend your argument
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They are doing both, actually. The MNCs are borrowing at a lower rate and they are speculating on future exchange rate movements. The smartest financing decision would be for the company to perform a cost benefit analysis or use some other comparable tool to determine if the benefit gained in terms of the exact amount of savings is greater than any possible costs or related losses. When a company analyzes the general currency trends in that specific ...
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