Parent-Subsidiary Asymmetry Can Arise from Forecasting Difference Between the Parent

question 1

Multiple Choice

Parent-subsidiary asymmetry can arise from forecasting difference between the parent and the subsidiary that can arise because:

• A)subsidiaries may be estimating cash flow in one currency and the parent may be estimating cash flow in another currency.
• B)parents often do not inform subsidiaries of all of the information that the parent uses in its forecasts.
• C)subsidiaries can have a positive bias that causes them to overestimate positive cash flow in order to make projects they want to pursue more attractive.
• D)parents often encourage subsidiaries to be aggressive in their estimations of positive future cash flow.

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Definitions:

Disposable Income

The fiscal potential for households to undertake spending and saving after income tax considerations.

Consumption

The process of using goods and services by households or individuals, contributing to overall economic activity.

Disposable Income

The amount of money individuals or households have available for spending and saving after income taxes have been deducted.

Consumption

The use of goods and services by households that leads to a decrease in their availability.