Indicators Pointing Towards the Local Overseas Currency as the Functional

question 14

Multiple Choice

Indicators pointing towards the local overseas currency as the functional currency include, that the:
I. Parent's cash flows are directly affected on a current basis.
II. Cash flows are primarily in the local currency and do not affect the parent's cash flows.
III. Sales prices are primarily responsive to exchange rate changes in the short-term.
IV. Production costs are determined primarily by local conditions.

• A) I and III only;
• B) II and IV only;
• C) I, III and IV only;
• D) I, II and IV only.

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Definitions:

Utility Function

A mathematical model that represents consumer preferences by assigning a level of utility, or satisfaction, to different bundles of goods or services.

Probability

An indicator of the probability of an event happening, represented by a value ranging from 0 to 1.

Wealth

The abundance of valuable resources or material possessions, or the control of such assets.

Flood

An overflow of water that submerges land that is usually dry, often caused by heavy rain, melting snow, or failure of a dam.