imports changes as the exchange-rate changes. Answer: FALSE 79) An economic exposure does not result in a change in future cash flows. Answer: FALSE 80) An exposure that arises from effects of exchange rate changes on the competitive position of the company is called an economic exposure. Answer: TRUE 81) Assume that a company has a foreign subsidiary in a country with an exchange rate that is expected to strengthen against the parent company's currency. If the parent is planning the timing for the subsidiary to send a dividend to the parent, it probably choose a lag strategy. Answer: TRUE AACSB: Reflective thinking skills 82) An option is a hedging instrument that allows one to establish a fixed exchange rate for future transactions where delivery is required. Answer: FALSE 83) Taxation is an important cash flow but it typically does not have a strong impact on the choice of organizational form (such as branch or subsidiary) or the location of an investment. Answer: 84) Subpart F income is passive and usually derived from operations in a tax-haven country. Answer: TRUE 85) The OECD has set transfer pricing guidelines to enhance the manipulation of prices and therefore for MNEs and the countries where they operate. Answer: FALSE
imports changes as the exchange-rate changes. Answer: FALSE 79) An economic exposure does not result in a change in future cash flows. Answer: FALSE 80) An exposure that arises from effects of exchange rate changes on the competitive position of the company is called an economic exposure. Answer: TRUE 81) Assume that a company has a foreign subsidiary in a country with an exchange rate that is expected to strengthen against the parent company's currency. If the parent is planning the timing for the subsidiary to send a dividend to the parent, it probably choose a lag strategy. Answer: TRUE AACSB: Reflective thinking skills 82) An option is a hedging instrument that allows one to establish a fixed exchange rate for future transactions where delivery is required. Answer: FALSE 83) Taxation is an important cash flow but it typically does not have a strong impact on the choice of organizational form (such as branch or subsidiary) or the location of an investment. Answer: 84) Subpart F income is passive and usually derived from operations in a tax-haven country. Answer: TRUE 85) The OECD has set transfer pricing guidelines to enhance the manipulation of prices and therefore for MNEs and the countries where they operate. Answer: FALSE
Ch19%20The%20Multinational%20Finance%20Function.docx