What Is the Major Disadvantage of a Subsidiary

question 205

Multiple Choice

What is the major disadvantage of a subsidiary?

• A)The need to commit funds and technology within a foreign country.
• B)The need for an export license for the subsidiary and the parent company.
• C)The parent company's need for contract manufacturers.
• D)The need for constant oversight of the subsidiary.

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Definitions:

Variable Cost

Costs that change in proportion to the level of production or business activity.

Fixed Cost

Costs that do not change with the level of production or business activity, such as rent, salaries, and insurance.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.