A Multinational Company (MNC)is Likely to Decentralize Its Decision Making

question 28

Multiple Choice

A multinational company (MNC) is likely to decentralize its decision making when:

• A) a subsidiary is selling new products in growing markets.
• B) it is a high-tech, research-intensive firm dealing with sophisticated levels of technology.
• C) the home office has a lot of confidence in delegating to a local level.
• D) local subsidiary managers are inexperienced or ineffective.

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Definitions:

Secured Debt

A debt that is backed by collateral, providing the lender with assurance that the loan can be recovered if defaulted.

Unsecured Debt

A type of debt that is not backed by collateral, making it riskier for lenders and often resulting in higher interest rates for borrowers.

Reinvestment Rate Risk

The risk that the yield from reinvesting cash flows will be lower than the initial investment's yield, typical in fixed-income securities.

Zero Coupon Bonds

Bonds that do not pay periodic interest payments and are instead sold at a discount from their face value and redeemed at maturity for the full face value.