An example of a/an ____________is if a subsidiary in Brazil needs Brazilian reals while a Brazilian company's subsidiary in the U.S. needs dollars. The Brazilian firm can lend reals to the U.S. owned subsidiary in Brazil while it borrows an equivalent amount of dollars from the U.S. parent in the U.S.
A) unparallel loan
B) overdraft
C) parallel loan
D) risky loan

Question

Quizplus · Accepted Answer

This scenario describes a parallel loan, where two subsidiaries of different parent companies swap currencies to meet their respective funding needs. This allows them to avoid currency conversion fees and potentially obtain more favorable interest rates. The other options listed (unparallel loan, overdraft, risky loan) do not accurately describe this type of transaction.

An Example of A/an ____________Is If a Subsidiary in Brazil