Question

Under the bilateral netting, if a US subsidiary owes a French subsidiary $8 million and the French subsidiary simultaneously owes the US subsidiary $6 million, a bilateral settlement will be made with a single payment of ________ from the French subsidiary to the US subsidiary.

Answer 1

Answer: Bilateral netting

Step-by-step explanation:

Bilateral netting: This is when two parties come together and carry out all their swap deals into a single master swap, which then creates a one net payment, instead of many which would have risen from paying individually. Bilateral netting helps to reduce accounting activity between all parties or individuals involved in the transaction, complexity, and all fees concerned with future trades and payments.