Business firms resort to foreign currency financing because:

Question

Quizplus · Accepted Answer

Foreign currency financing can be cheaper than domestic currency financing due to differences in interest rates between countries, making it an attractive option for businesses looking to reduce financing costs. Choices A and C are incorrect because foreign currency financing can actually increase the volatility of borrowing costs due to exchange rate fluctuations and does not eliminate long foreign exchange exposures but rather introduces or increases them.

Business Firms Resort to Foreign Currency Financing Because