When a Company Wants to Be Compensated in a Foreign

question 53

Multiple Choice

When a company wants to be compensated in a foreign subsidiary beyond its contribution in capital and managerial resources, it often ________.

• A)licenses intangible property to its subsidiary
• B)negotiates a special agreement with the host government
• C)establishes a management contract
• D)sets up an equity alliance

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Definitions:

Market

A venue where goods, services, or financial instruments are exchanged between buyers and sellers, either physically or electronically.

Beta

An indicator of a stock's fluctuation compared to the general market, where a beta above 1 signals increased volatility.

Risk-Free Rate

An estimated profit from a risk-free investment, commonly illustrated by government security yields.

Expected Return

The anticipated percentage gain or loss that an investor predicts a stock or investment will earn in the future based on historical or calculated projections.