Which One of the Following Statements Is True for the Centralized

question 3

Multiple Choice

Which one of the following statements is true for the centralized debt denomination model?

• A) The debts for both the parent company and its foreign subsidiaries are denominated in the home currency of the parent company.
• B) The debt service payments are denominated in the currency in which the subsidiary's revenues are received.
• C) The debts for both the parent company and its foreign subsidiaries are denominated in the currency of the largest subsidiary.
• D) The debt service payments are denominated in the currency in which the subsidiary's revenues are received which does not balance foreign assets against foreign liabilities.

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Definitions:

Financial Assets

Economic resources or ownerships that are convertible into cash or will generate cash in the future, such as stocks or bonds.

Capital

In finance, it refers to the financial assets or resources that individuals or enterprises use for investing, producing goods, or services.

Real Assets

Physical or tangible assets that have intrinsic value due to their substance and properties, such as real estate, commodities, or natural resources.

Buying a Bond

The act of purchasing a bond, a debt security issued by entities such as governments or corporations, where the issuer owes the holders a debt and is obliged to pay interest.