Assume an MNC Establishes a Subsidiary Where It Has No

question 32

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:

Survey

a method of gathering information by asking a series of questions to a group of people.

Type I Error

The mistaken dismissal of a correct null hypothesis, often referred to as a "false positive."

Proportion

A part, share, or number considered in comparative relation to a whole, typically expressed as a fraction or percentage.

Hypothesis Test

A methodology in statistics that utilizes data from a subset to assess a conjecture about a population attribute.