Multilateral netting compounds the transaction costs that arise when many transactions occur between a firm and its subsidiaries.

Question

Quizplus · Accepted Answer

Multilateral netting actually reduces transaction costs by reducing the number of individual transactions that need to be made between a firm and its subsidiaries. It allows for offsetting of debts and credits, resulting in a reduction in foreign exchange exposure and lower transaction fees.

Multilateral Netting Compounds the Transaction Costs That Arise When Many