A Subsidiary Is Most Likely to Receive Favorable Treatment from an MNE

question 49

Multiple Choice

A subsidiary is most likely to receive favorable treatment from an MNE if it is located in a country with ________.

• A) lower corporate income-tax rates
• B) significant restrictions on profit repatriation
• C) low tariffs for the product in question
• D) political instability

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Definitions:

T-Bill

Short for Treasury Bill, a short-term government security issued at a discount from the par value and paying no interest before maturity.

Simple Interest

A method of calculating interest where the calculation is based only on the original amount of money invested or borrowed, excluding the effect of compounding.

Profit

The financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Personal Line

A type of credit product that allows individuals to borrow up to a pre-approved limit on an as-needed basis.