Â The differences between parallel and fronting loans. Introduction: Parallel loan: It is an arrangement among four parties in which two parent companies operating in different countries borrow money in their local currency and lend that money to their other local subsidiaries.Â Fronting loan: It is a three-party arrangement in which a debt obligation is provided to a parent company that ultimately distributes this fund to its subsidiaries or other local units.

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Chapter 21, Problem 12DQ

Summary Introduction

To explain:Â The differences between parallel and fronting loans.

Introduction:

Parallel loan:

It is an arrangement among four parties in which two parent companies operating in different countries borrow money in their local currency and lend that money to their other local subsidiaries.Â

Fronting loan:

It is a three-party arrangement in which a debt obligation is provided to a parent company that ultimately distributes this fund to its subsidiaries or other local units.

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