Multinational firms have found that they can lower borrowing costs:
A) by borrowing US dollars.
B) by issuing more debt.
C) by using more bankers' acceptances.
D) by borrowing foreign currencies through foreign subsidiaries at rates lower than the Canadian prime and then converting these foreign loans into dollars.

Question

Quizplus · Accepted Answer

Borrowing foreign currencies through foreign subsidiaries allows multinational firms to take advantage of lower interest rates in those foreign countries and then convert those loans into Canadian dollars. This can lower their borrowing costs compared to borrowing directly in Canada.

Multinational Firms Have Found That They Can Lower Borrowing Costs