When a Foreign Subsidiary Is Not Wholly Owned by the Parent

question 6

Multiple Choice

When a foreign subsidiary is not wholly owned by the parent and a foreign project is partially financed with retained earnings of the parent and of the subsidiary, then:

• A) the parent's perspective should be used to evaluate a foreign project.
• B) the subsidiary's perspective should be used to evaluate a foreign project.
• C) the foreign project should enhance the value of both the parent and the subsidiary.
• D) None of these are correct.

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Definitions:

Theory of Mind

The cognitive ability to attribute mental states—beliefs, intents, desires, emotions—to oneself and others and to understand that others have beliefs and perspectives different from one's own.

Egocentrism

A cognitive trait characterized by difficulty in understanding or acknowledging viewpoints different from one's own.

Predict

To declare or indicate in advance; to foresee or calculate the future occurrence of something.

Underestimated

describes judging something or someone to be lower in value, strength, or importance than it actually is.