When would a multinational use a lead strategy to hedge a risk? When would a multinational use a lag strategy for this purpose?
In each case, give an example. A lead strategy is a choice by an MNE to make intracompany payments (for example, from an affiliate to the home office) earlier than in an arm's length situation, to move funds out of the country of the affiliate more rapidly.
A lag strategy is a choice by an MNE to make intracompany payments (for example, from an affiliate to the home office) later than in an arm's length situation, to hold funds longer in the affiliate country.