The concept of parallel loan says a.   Amount of the loan moves out of the county but it serves the purpose of internal loan also. b.   Amount of the loan moves out of the county but it...

The concept of parallel loan says


a.   Amount of the loan moves out of the county but it serves the purpose of internal loan also.

b.   Amount of the loan moves out of the county but it serves the purpose of cross border loan.

c.   Amount of the loan moves within the county and it serves the purpose of external loan only.

d.   Amount of the loan moves within the county but it serves the purpose of cross border loan.

Asked on by nirmalnss

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equeenan | College Teacher | (Level 1) Adjunct Educator

Posted on

Nirmalnss,

I cannot ethically give you the exact answer, but here is some information that should help a lot! Here is information regarding parallel loans and cross border loans that can be accessed via the internet.

1)      By definition a parallel loan is: “involves two parent companies taking loans from their respective national financial institutions and then lending the resulting funds to the other company's subsidiary.”[i]

2)      The purpose is to reduce the foreign exchange risk for both parties.[ii]

Cross border loans:

1)      A cross border loan is financing that is undertaken between two different countries.[iii]

Given the above definitions I think you should be able to answer your presented question! Hope it helps.


[i] http://www.investopedia.com/terms/p/parallelloan.asp

 

[ii] http://www.investorwords.com/3585/parallel_loan.html

 

[iii] http://www.investopedia.com/terms/c/cross-border-financing.asp

 

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