Scenario: Global Manufacturing, Inc. (GMI)

question 53

Multiple Choice

Scenario: Global Manufacturing, Inc. (GMI)
GMI is a fast-growing U.S. company that wants a production system that makes each of its product's two components in the location where the cost of production is lowest. The components will then be taken to maquiladoras for final assembly. GMI purchased an existing company in Brazil to produce component A and built a subsidiary in Thailand to produce component B.
-GMI's expansions into Brazil and Thailand would appear in the ________.

• A) current account of the United States
• B) capital account of the World Trade Organization
• C) capital accounts of Brazil, Thailand, and the United States
• D) current accounts of Brazil and Thailand

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Definitions:

Designated Securities

These are specific securities that have been selected for a special purpose, such as being eligible collateral for a loan or part of a regulated market segment.

Moral Hazard

The situation where one party to an agreement can take risks because they know that another party bears the consequences of those risks, often seen in insurance and finance.

Unfavorable Information

Data or news that negatively impacts the valuation or perception of a company or investment.

Auditors

Professionals who examine and verify a company’s financial records and practices to ensure accuracy and compliance with accounting standards and regulations.