MNCs can use ____ to reduce exchange rate risk. This occurs when two parties provide simultaneous loans with an agreement to repay at a specified point in the future.

Question

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Parallel loans involve two parties in different countries lending to each other in their respective currencies, which helps mitigate exchange rate risk by agreeing on a future repayment in their own currencies, thus avoiding the need to engage in currency exchange.

MNCs Can Use ____ to Reduce Exchange Rate Risk