An international firm routinely finances new subsidiaries by lending money from the corporate treasury so it can vary interest rates and payback terms. This company is using a(n):
A) Debt options using external financing
B) Equity options using external financing
C) Equity options using internal financing
D) Debt options using internal financing

Question

Quizplus · Accepted Answer

The company is using its own corporate treasury to lend money to its subsidiaries, which means it is using internal resources rather than seeking external financing. Since it involves lending money that needs to be paid back with interest, it is considered a form of debt financing. Therefore, the correct answer is debt options using internal financing.

An International Firm Routinely Finances New Subsidiaries by Lending Money