||exists whenever we are due to receive or pay a quantity in a foreign currency in a few months’ time and do not know what the price of this currency will be when that happens.
||refers to the investment the firm has in transaction balances to cover scheduled outflows of funds during a cash budgeting period and the funds the firm has tied up in precautionary cash balances.
|Precautionary cash balances
||necessary in case the firm has underestimated the amount needed to cover trans- actions.
||Is a plan detailing the time and the size of expected cash receipts and dis- bursements.
||effectively represent taking money out of one pocket of the MNC and putting it into another
|bilateral netting system
||each pair of affiliates determines the net amount due between them, and only the net amount is transferred.
|multilateral netting system
||each affiliate nets all its interaffiliate receipts against all its disbursements. It then transfers or receives the balance, respectively, if it is a net payer or receiver.
|netting center manager
||determines the amount of the net payments and which affiliates are to make or receive them
||Book value assigned to a product or service to be moved from one subsidiary to another.