When a US-Based MNC Has a Subsidiary in Mexico That Needs Financing

question 50

Multiple Choice

When a U.S.-based MNC has a subsidiary in Mexico that needs financing, the MNC's exposure to exchange rate risk can be minimized if:

• A) the parent issues dollar-denominated equity and provides the proceeds to the subsidiary.
• B) the parent provides its retained earnings to the Mexican subsidiary.
• C) the subsidiary obtains a dollar-denominated loan from a financial institution.
• D) the subsidiary obtains a peso-denominated loan from a financial institution.

Understand the difference between operational effectiveness and strategic positioning.

Understand and calculate manufacturing cycle efficiency (MCE).

Analyze and compute the time taken for processes, including throughput and delivery cycle times.

Determine and evaluate margins and turnovers for investment opportunities.

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Definitions:

Fundamental Niche

The entire set of conditions under which an organism can survive and reproduce without the presence of competition or predators.

Competition For Food

occurs when two or more organisms or species vie for the same food resources in their habitat, which can influence the population and distribution of the species involved.

Ecological Niche

The role and position a species has in its environment, including all its interactions with the biotic and abiotic factors.

Resource Requirements

The necessary inputs and materials needed for a process, organization, or system to function properly.