Assume an MNC Establishes a Subsidiary Where It Has No

question 63

Multiple Choice

Assume an MNC establishes a subsidiary where it has no other existing business. The present value of parent cash flows from this subsidiary is more sensitive to exchange rate movements when:

• A) the subsidiary finances the entire investment by local borrowing.
• B) the subsidiary finances most of the investment by local borrowing.
• C) the parent finances most of the investment.
• D) the parent finances the entire investment.

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Definitions:

Predominantly Black

describes communities or areas where the majority of the population is of African descent or identifies as black.

Supermarket Redlining

A discriminatory practice where supermarkets or large grocery store chains avoid opening stores in economically disadvantaged or minority neighborhoods.

Corporations

Organizations or businesses recognized by law as a single entity, having rights and responsibilities, and authorized to act as a single person.

Low-Profit Areas

Regions or communities characterized by below-average income levels and economic activity, often facing higher instances of poverty and limited access to resources.