Which of the following statements holds true for fronting loan?
A)It refers to the process of financing long-term outlays for major projects such as plant expansion, entry into new markets, or research and development.
B)It refers to raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future.
C)It refers to a process which in which the parent company directly gives a loan to its subsidiary.
D)It refers to the funding of the subsidiary by the parent company through a financial intermediary such as a bank.
E)It refers to the loan on which the bank charges companies a slightly lower rate of interest for expanding operations in developing countries.

Question

Quizplus · Accepted Answer

Fronting loans involve a parent company funding its subsidiary through a financial intermediary, typically for the purpose of benefiting from certain advantages such as tax benefits or to comply with regulatory requirements in the subsidiary's country.

Which of the Following Statements Holds True for Fronting Loan