Why Would the Management of a Multinational Corporation Incur Real

question 20

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:

Organic Organization

An organizational structure that is flexible, adaptive, and less formalized, enabling quick responses to changes in the environment.

Formal Rules

Explicitly stated policies or statutory regulations that govern behavior and procedures within organizations or institutions.

Fundamentals Of Organizing

involves the basic principles and practices of arranging the structure, roles, and processes in an organization to achieve efficiency and goals.

Span Of Control

The number of subordinates or direct reports that a manager or leader can effectively oversee and manage.