A negative effective financing rate indicates that an MNC:
A) paid only a small amount in interestover 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 United States.

Question

​A negative effective financing rate indicates that an MNC:
A) ​paid only a small amount in interestover 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 United States.

Quizplus · Accepted Answer

A negative effective financing rate means that the MNC actually paid back less than it borrowed due to exchange rate movements. This typically happens when the foreign currency in which the loan was denominated has appreciated significantly against the MNC's home currency during the loan period.

​A Negative Effective Financing Rate Indicates That an MNC

A Negative Effective Financing Rate Indicates That an MNC