Hedging the Position of Individual Subsidiaries Is Generally Necessary, Even

question 56

True/False

Hedging the position of individual subsidiaries is generally necessary, even if the overall performance of the MNC is already insulated by the offsetting positions between subsidiaries.

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Definitions:

Operating Income

Income generated from the regular business operations of a company, excluding items such as investment income, interest expense, and other non-operational income or expenses.

Intra-Entity Transfers

Refers to the transfer of goods, services, or resources between units within the same entity.

Goodwill

The intangible asset that represents the excess value of a company beyond its physical assets and liabilities, often arising from acquisitions.

Tax-Free Transaction

A financial transaction that does not result in a tax liability for any of the parties involved.