MNCs may be able to lock in a lower cost from financing in a low interest rate foreign currency if they:
A) have future cash inflows in that foreign currency.
B) have future cash outflows in that foreign currency.
C) have offsetting future cash inflows and outflows in that foreign currency.
D) have no other cash flows in that foreign currency.

Question

Quizplus · Accepted Answer

If MNCs have future cash inflows in the foreign currency, they can use those inflows to repay the foreign currency debt, thus benefiting from the lower interest rates without facing exchange rate risk.

MNCs May Be Able to Lock in a Lower Cost