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 to reduce exchange rate risk, with an agreement to repay the loans at a specified future date. This allows both parties to secure foreign currency without directly exchanging currencies, thus mitigating the risk of currency fluctuations.

MNCs Can Use ____ to Reduce Exchange Rate Risk