When the Functional Currency Is the Foreign Entity's Currency

question 12

Multiple Choice

When the functional currency is the foreign entity's currency:

• A) exchange rate changes do not affect the economic well being of the parent
• B) the subsidiary operates as an entity, independent of the parent
• C) Exchange rate changes do not have immediate impact on the cash flows of the parent
• D) All of the above are correct

---

Definitions:

Leveraged Buyout

The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition.

Sale

The exchange of goods, services, or assets for money between a buyer and a seller.

Proxy Fight

A battle for control over a company, where opposing parties attempt to win the votes of shareholders to effect change in the company's board of directors.

Incompatible Operations

Processes or activities that cannot be efficiently executed together due to differing requirements or objectives.