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So I read this sentence in a textbook but i don't know which subject, the bank or the corporate client, is having its foreign exchange risk decreased. I THINK its the corporate client...

"For example, a bank might enter into a derivatives transaction with a corporate client to help it reduce its foreign exchange risk."

i.e. is the "it" referring to the bank or the corporate client.

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    It's not really two subjects--it's two nouns, one of which is the object of a preposition. The sentence is ambiguous. "it" is closest to "client", which would argue for your interpretation, but this could have been more clearly written. – Xanne Mar 7 '17 at 4:31
  • "It" refers to the bank. It can't refer to the corporate client, because then then the logical subject of "help" would have the same reference as its object: " ... (for the corporate client) to help itself/*it ...". That requires a reflexive pronoun. – Greg Lee Mar 7 '17 at 4:31
  • I'd say that the subject of "help" is "a bank" (it's the bank that is doing the helping; that's "what they do"). So the most likely antecedent of "it" is "a corporate client". The infinitival clause "to help it reduce its foreign exchange risk" is a purpose adjunct, cf. "in order to help it reduce its foreign exchange risk". – BillJ Mar 7 '17 at 13:58
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It can help to consider something simpler.

Sally made an agreement with Mark.

We may wonder a) why she made the agreement, and b) what was the agreement. Let us suppose that she will mow his lawn and, in return, he will pay her.

Sally made an agreement with Mark to help her reduce her debts

tells us why she made the agreement, the money he pays her will go some way to paying off her debts.

Sally made an agreement with Mark to mow his lawn

tells us the nature of the agreement, from Sally's perspective.

But what was the nature of the agreement from Mark's point of view?

Mark made an agreement with Sally to help her reduce her debts.

That is what he agreed, in exchange for his lawn being mown.

So we have the following two statements:

Mark made an agreement with Sally to help her reduce her debts.

Sally made an agreement with Mark to help her reduce her debts.

One tells us what Mark agreed to do, and the other tells us why Sally entered the agreement.

Now lets consider the same arrangement being made between Andrew and Richard.

Richard made an agreement with Andrew to help him reduce his debts.

Now we are confused. We don't know whether we are being told why Richard made the agreement (to reduce Richard's debts) or what Richard agreed to do (reduce Andrew's debts).

Back to OPs question.

a bank might enter a transaction with a client to help it reduce its risks

is ambiguous because we do not know whether we are being told why the bank entered the transaction, or what the transaction was. Which of the many meanings of "to" is being used here?

There is a convention that a word such as "him" (or "it" as an object) refers to the most recently mentioned antecedent noun with which it agrees in gender etc. So "him" is Andrew and "it" is the client.

However this does not really help in practice because not everybody follows the convention, and even people who do may get it wrong.

We usually use "help" to refer to helping someone else, so that suggests the client, but as shown above it is perfectly ok to help oneself.

I would conclude that the sentence is simply ambiguous and not a very good example of whatever it was supposed to be an example of.

Sometimes in such cases we can determine the meaning from context.

The boy made an arrangement with a retired maths teacher to help him with his homework.

It is not likely that the boy is helping the teacher, we conclude the teacher is helping the boy.

In the case of the bank and the client, business ethics suggest it is the client who should be being helped, and banks do offer such arrangements to allow clients to hedge against currency risks. So this further suggests "it" is the client. On the other hand, how ethical are banks?

In conclusion, I don't think we can be sure, but "it" is most likely the client.

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  • "Something simpler"? Perhaps your thorough answer could be shortened a tad, for the sake of the reader. – Yosef Baskin Mar 7 '17 at 19:38

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