When a Foreign Subsidiary Is Not Wholly Owned by the Parent

question 12

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 the above

Understand the concept of economic investment and distinguish it from personal investment.

Identify and analyze components of Gross Domestic Product (GDP), focusing on investment's role.

Differentiate between various forms of business ownership and their characteristics.

Calculate and interpret expected profit rates and understand their implications on investment decisions.

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Definitions:

Microeconomist

An economist focused on the behavior of individuals and firms in making decisions regarding the allocation of scarce resources.

Microeconomist

A specialist in microeconomics, which deals with the economic behavior of individuals, households, and firms, and how decisions are made on the allocation of resources.

Macroeconomist

An economist who specializes in macroeconomics, studying aggregated indicators and the behavior of the economy as a whole, including inflation, unemployment, and economic growth.

Normative Statement

A statement that reflects an opinion, value judgment, or what ought to be, rather than what is empirically verifiable.