Concept – Fronting Loan Features in International Subsidiaries

Multinational Business Finance

Eiteman, Stonehill, and Moffett

16th Edition

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Which option does NOT describe a common attribute of a fronting loan provided to an international subsidiary?

A. The lending bank is located in the subsidiary's country.

B. The bank lends to the subsidiary firm an amount equal to the parent deposit at a slightly higher interest rate.

C. The parent makes a deposit equal to the size of the desired loan into a large commercial bank.

D. All of the above are typical characteristics of a fronting loan.

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