Tools that multinationals can use to help them reduce the risks inherent in making investments in foreign countries include ___________.

Question

Quizplus · Accepted Answer

Multinationals can use options, hedges, and swaps to reduce risks associated with foreign investments. Options allow companies to buy or sell assets at a pre-determined price, hedges involve contracts that offset losses that may occur in the foreign market, and swaps involve exchanging cash flows with another entity to offset risks. Using all three options together can provide comprehensive risk management for multinational investments.

Tools That Multinationals Can Use to Help Them Reduce the Risks