A loan in which a parent deposits money with a host-country bank, which then lends the money to a subsidiary located in the host country is known as a(n) ________.
A) internal funding
B) external funding
C) back-to-back loan
D) American Depository Receipt

Question

Quizplus · Accepted Answer

This type of loan is known as a back-to-back loan, where the parent company deposits money in a host-country bank, which then lends the money to its subsidiary located in the same host country. This allows the subsidiary to access capital at a lower interest rate than they would be able to on their own. Internal funding refers to funding generated from within the company, while external funding refers to funding from sources outside the company. American Depository Receipts are a way for foreign companies to list their shares on US exchanges.

A Loan in Which a Parent Deposits Money with a Host-Country