Why Would the Management of a Multinational Corporation Incur Real

question 49

Multiple Choice

Why would the management of a multinational corporation incur real costs to hedge accounting exposure,which is only on paper?

• A)Fluctuations in reported income may affect stock price.
• B)Management compensation may be tied to accounting income.
• C)Hedging can smooth income.
• D)all of the above

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Definitions:

Comptroller of the Currency

This is a government official responsible for overseeing the federal banking system and ensuring the stability and compliance of national banks.

Lender of Last Resort

A lender of last resort is an institution, usually a country's central bank, that offers loans to banks or other eligible institutions that are experiencing financial difficulty or are considered highly risky.

Federal Reserve

The central banking system of the United States, which regulates banks, manages the country's money supply, and aims to ensure financial stability.

Monetary Policy

The actions undertaken by a central bank, such as the Federal Reserve, to control the money supply and influence the economy's overall level of activity, inflation, and interest rates.