Assume an MNC Establishes a Subsidiary Where It Has No

question 32

Multiple Choice

Assume an MNC establishes a subsidiary where it has no other existing business. The present value of parent cash flows from this subsidiary is more sensitive to exchange rate movements when:

• A) the subsidiary finances the entire investment by local borrowing.
• B) the subsidiary finances most of the investment by local borrowing.
• C) the parent finances most of the investment.
• D) the parent finances the entire investment.

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Definitions:

James K. Polk

The 11th President of the United States (1845-1849), known for his expansionist policies that led to the acquisition of territories such as Oregon and parts of what is now southwestern United States.

Presidential Candidate

An individual who runs for election to the position of president in a country.

Military Action

Operations conducted by armed forces to defend against an enemy attack, secure an area, or engage in combat operations.

James K. Polk

The 11th President of the United States (1845-1849), known for his expansionist policy that led to significant territorial acquisitions.