Decision making in finance is rarely black and white and one decision can be appropriate for one situation and not appropriate for another. Point and counter-point discussions should highlight this as well as expand upon the ability to support a decision that may not be supported by others in the same department.

Initial Post Instructions

Consider the following point and counter-point arguments then use the Internet to learn more about the issue. Which argument to you support? Explain why and offer your own opinion on the issue.

• Point: MNCs increase their risk when borrowing foreign currencies. MNCs should borrow the currency that matches their cash inflows. If they borrow a foreign currency to finance business in a different currency, they are essentially speculating on the future exchange rate movements. The results of this strategy are uncertain, which represents risk to the MNC and its shareholders.
• Counter-Point: MNCs do not increase their risk when borrowing foreign currencies. If MNCs expect that they can reduce the effective financing rate by borrowing a foreign currency, they should consider borrowing that currency. This enables them to achieve lower costs, and improves their ability to compete. If they take the most conservative approach by borrowing whatever currency matches their inflows, they may incur higher costs, and have a greater chance of failure.

• Initial Post Length: minimum of 350 words