Gretz Tool Company is a large U.S.-based multinational corporation with subsidiaries in eight different countries. The parent
Question:
Gretz Tool Company is a large U.S.-based multinational corporation with subsidiaries in eight different countries. The parent of Gretz provided an initial cash infusion to establish each subsidiary. However, each subsidiary has had to finance its own growth since then. The parent and subsidiaries of Gretz typically use Citigroup
(with branches in numerous countries) when possible to facilitate any flow of funds necessary.
a. Explain the various ways in which Citigroup could facilitate Gretz’s flow of funds, and identify the type of financial market where that flow of funds occurs. For each type of financing transaction, specify whether Citigroup would serve as the creditor or would simply be facilitating the flow of funds to Gretz.
b. Recently, the British subsidiary called on Citigroup for a medium-term loan and was offered the following alternatives:
What characteristics do you think would help the British subsidiary determine which currency to borrow?
Step by Step Answer:
