Which of the following statements about multilateral netting system are correct? (i)Each affiliate nets all its inter-affiliate receipts against all its disbursements.
(ii)Each affiliate transfers or receives a balance,depending on whether it is a net payer or receiver.
(iii)The net funds to be received by the affiliates will equal the net disbursements to be made by the affiliates.
(iv)Only two foreign exchange transactions are necessary since the affiliates' net receipts will always be equal to zero.
(v)Only two foreign exchange transactions are necessary since the affiliates' net disbursements will always be equal to zero.

Question

Quizplus · Accepted Answer

(i), (ii), and (iii) are correct because they accurately describe the process and benefits of a multilateral netting system. In such a system, each affiliate nets its receipts against disbursements, resulting in either a net payment or receipt. The total net receipts and disbursements across the system are equal, ensuring efficiency in transactions. Statements (iv) and (v) are incorrect because the number of foreign exchange transactions needed is not necessarily limited to two; it depends on the net positions of the affiliates and does not imply that net receipts or disbursements will always equal zero.

Which of the Following Statements About Multilateral Netting System Are