An advantage of netting of a multinational corporation and its subsidiaries is that it:
A) increases foreign exchange risk.
B) decreases the total volume of inter-subsidiary fund flows.
C) increases the total amount of currency conversion.
D) decreases the number of employees.

Question

Quizplus · Accepted Answer

Netting of a multinational corporation and its subsidiaries reduces the total volume of inter-subsidiary fund flows, leading to cost savings and increased efficiency by reducing administrative expenses and transaction costs associated with currency conversions. It also simplifies cash management processes, reducing the need for external financing and improving liquidity. Therefore, option B is the correct choice. Options A, C, and D are all incorrect because netting does not increase foreign exchange risk, the total amount of currency conversion, or decrease the number of employees.

An Advantage of Netting of a Multinational Corporation and Its