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:

Lost Sale

A potential sale that is not realized, often due to stockouts or inability to meet customer demand.

Salvage Value

The estimated resale value of an asset at the end of its useful life, often considered for depreciation calculations.

Stockout

A situation where items are not in stock and unavailable for sale or use, leading to potential loss of sales.

Uncertainty of Demand

The unpredictable nature of consumer demand, making it challenging to accurately forecast sales or production needs.