One Argument for Why Subsidiaries Should Be Wholly Owned by the MNC

question 5

Multiple Choice

One argument for why subsidiaries should be wholly owned by the MNC parent is that parent ownership avoids a potential conflict of interest between the:

• A) parent's managers and board of directors.
• B) parent and managers at the subsidiary who are minority shareholders.
• C) parent and existing creditors.
• D) subsidiary's managers and creditors.

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Definitions:

Federal Reserve

The central banking system of the United States, which conducts the nation's monetary policy, regulates banks, maintains the stability of the financial system, and provides financial services to depository institutions, the U.S. government, and foreign official institutions.

Monetary Policy

Economic policy tools used by a central bank to control the supply of money, aiming to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.

Interest-Rate Targets

The specific interest rates that central banks aim for in their monetary policy operations to influence economic conditions.

Money-Supply Targets

Economic policy goals that aim to control the amount of money available in the economy to ensure stability or encourage growth.