U.S.-based MNCs whose foreign subsidiary generates large earnings may be able to offset exposure to exchange rate risk by issuing bonds denominated in the subsidiary's local currency.

Question

Quizplus · Accepted Answer

By issuing bonds denominated in the subsidiary's local currency, the MNC can use the funds to finance operations in the local currency and reduce their exposure to exchange rate risk.

US-Based MNCs Whose Foreign Subsidiary Generates Large Earnings May Be