Scenario: Verandas International
Verandas International is expanding its operations in North America. The Dutch company supplies products needed by restaurants with outdoor tables. Verandas International is a leader in this industry, but the company believes it must increase its geographic reach to maintain that position.
-Verandas International was turned down when it tried to borrow from a U.S. bank. The bank manager suggested that the parent firm deposit money with the U.S. bank's Dutch branch, and then the U.S. bank's home office would then lend the money to the Dutch company's U.S. subsidiary. This type of arrangement is known as a(n)________.
A) American Depository Receipt
B) internal funding situation
C) back-to-back loan
D) venture capitol loan

Question

Quizplus · Accepted Answer

The type of arrangement described in the scenario is known as a back-to-back loan, in which a loan is made by one bank to another bank, which then loans the money to the borrower. This allows the borrower to obtain financing from a foreign bank that may be more willing to lend, while also satisfying the local lending regulations. American Depository Receipts (ADRs) involve a company issuing shares in the U.S. market, internal funding situations refer to a company using its own funds to finance its operations, and venture capital loans involve an investor providing funds in exchange for equity in a start-up business.

Scenario: Verandas International Verandas International Is Expanding Its Operations in North America. the North