Consider a U

question 64

Multiple Choice

Consider a U.S. MNC with operations in Great Britain. Which of the following are potential risks following a strengthening of the dollar?

• A)A pound sterling depreciation may affect operating cash flow in pounds by altering the firm's competitive position in the marketplace.
• B)A given operating cash flow in pounds will be converted into a lower dollar amount after the pound depreciation.
• C)Both a and b
• D)None of the above

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, capable of owning property, entering into contracts, and being sued.

AMT Income

Income calculated for the Alternative Minimum Tax, which ensures high-income earners pay a minimum amount of tax.

Subchapter S Status

A tax status elected by qualifying small businesses where income, losses, deductions, and credits flow through to the shareholders, preventing double taxation.

Shareholders

Shareholders are individuals or entities that own one or more shares of stock in a corporation, giving them ownership interests in the company.