Multinationals Often Strive to Maximize the Amount of Equity from the Parent

question 18

True/False

Multinationals often strive to maximize the amount of equity from the parent company in foreign subsidiaries in order to reduce capital risk.

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Definitions:

Security

A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a security at a specific price before a certain date.

Earnings Per Share

A company's profit divided by the number of outstanding shares of its common stock, indicating profitability.

Total Equity

The total of all ownership interests in a company, calculated as the difference between total assets and total liabilities; also known as shareholders' equity or owner's equity.