Pregunta
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For firms engaged in international lending and borrowing,
(A) swings in exchange rates
(B) trade-offs and risks
© foreign portfolio investment
(D) foregn direct investment
(Dave an enormous effect on profits.
( Listen

Ask by Newton Nguyen. in the United States
Mar 30,2025

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Swings in exchange rates have a significant impact on the profits of firms involved in international lending and borrowing.

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Beyond the Answer

Swings in exchange rates can greatly impact a firm’s profitability in international lending and borrowing. When currencies fluctuate, the value of repayments can change dramatically, making it either more expensive or less costly for borrowers to pay back loans. This volatility can lead to unexpected losses or gains, ultimately affecting the bottom line for both lenders and borrowers.
Additionally, managing trade-offs and risks is crucial in international finance. Firms must balance potential high returns from foreign investments with the risks of political instability, economic downturns, and varying regulatory environments in different countries. By effectively assessing these factors, companies can minimize risks and maximize their international financial success.

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