A loan arrangement between a parent company and its foreign affiliate which avoids the exchange markets entirely is called a:

Question

Quizplus · Accepted Answer

A parallel loan is a loan agreement between a parent company and its foreign affiliate that avoids the exchange markets entirely. This type of loan involves two separate loans, which are given by each company to the other but are denominated in each other's currency. Therefore, no exchange of currencies takes place, and the parent and its affiliate can avoid any currency risks associated with the exchange rate. The other options (B: EDC direct loan, C: fronting loan, and D: could be any one depending on the circumstances) do not accurately describe this type of loan arrangement.

A Loan Arrangement Between a Parent Company and Its Foreign