What Is an Effective Way for MNCs to Address the Risk

question 15

Multiple Choice

What is an effective way for MNCs to address the risk that a country where it is going to do business has different rules and regulations than other countries?

• A)It can buy insurance to cover unexpected expenses and losses.
• B)It can set up a limited operation in that country to learn about its regulatory climate before expanding operations.
• C)It can form a joint venture with another firm to spread the risks.
• D)It can make significant investments in the country so that it can gain influence there.

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Definitions:

Operating Activities

Business activities and transactions related to the core operations of a company, including revenue-generating and expense activities.

Prepaid Expenses

Expenses paid in advance for goods or services, recognized as assets until the benefits are realized or consumed.

Investing Activities

Components of cash flow statements that show the purchase and sale of long-term investments and property, plant, and equipment.

Principal Collection

The process of receiving the original amount borrowed in a loan, excluding any interest payments.