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

question 6

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.

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Definitions:

Product Variety

The range of different items or models that a company offers to meet diverse customer needs and preferences.

Omni-Channel Retail

A multi-channel approach to sales that aims to provide the customer with a seamless shopping experience, whether they are shopping online, by phone, or in a physical store.

Shopping Experience

Refers to the overall perception and satisfaction of customers when purchasing products or services, influenced by factors like customer service, store layout, and product availability.

Retail Storage

The space used to store merchandise in retail operations before it is sold to customers.