Which of the following is a major benefit of international lending?
A. It requires reducing restrictive international trade practices in the lending and the borrowing countries.
B. It allows some lenders to shift their lending to foreign borrowers who are willing to pay higher interest rates on the loans..
C. It eliminates exchange rate risk in financial activities.
D. It allows both small countries and large countries to apply similar levels of optimal taxes on the international loans.
Answer: B
You might also like to view...
Adjusted for risk, interest rate parity
A) holds only for larger countries. B) holds only between the U.S. and Canada. C) holds only when purchasing parity holds. D) always holds.
(Consider This) The story about economist Irving Fisher's conversation with his masseuse illustrates that interest payments arise because of:
A. the possibility of inflation. B. the reality of credit risk. C. imperfect information about the future. D. the time-value of money.