1)An MNC considers direct foreign investment in Germany. It is mainly concerned

Question

1)An MNC considers direct foreign investment in Germany. It is mainly concerned with the subsidiary's ability to generate sufficient sales there. The country risk characteristic that would best address this concern is:
a. the host government's tax rates charged on remitted earnings.
b. the possibility of blocked funds.
c. the state of the economy in Germany.
d. the possibility of a withholding tax imposed by the German government.

2)As far as the managerial talent of the target is concerned:
a. the manner in which the acquirer plans to deal with the managerial talent will affect the estimated cash flows to be generated by the target.
b. downsizing will reduce expenses and increase productivity and revenues.
c. governments of some countries are likely to intervene and prevent the acquisition if downsizing is anticipated.
d. all of the above
e. A and C only

3)If revenues and costs are equally sensitive to exchange rate movements, MNCs may reduce their economic exposure by restructuring their operations to shift the sources of costs or revenues to other locations so that:
a. cash inflows exceed cash outflows in each foreign currency.
b. cash outflows exceed cash inflows in each foreign currency.
c. cash inflows match cash outflows in each foreign currency.
d. none of the above

please explan its my final want help

Explanation / Answer

I'm assuming MNC = multi-national corporation, but let me know if you're meaning something else.

1)An MNC considers direct foreign investment in Germany. It is mainly concerned with the subsidiary's ability to generate sufficient sales there. The country risk characteristic that would best address this concern is:
a. the host government's tax rates charged on remitted earnings.
b. the possibility of blocked funds.
c. the state of the economy in Germany. this will indicate how much spending people do = how many sales you can make (if people aren't spending, you're not going to sell much)
d. the possibility of a withholding tax imposed by the German government.

2)As far as the managerial talent of the target is concerned:
a. the manner in which the acquirer plans to deal with the managerial talent will affect the estimated cash flows to be generated by the target.
b. downsizing will reduce expenses and increase productivity and revenues. this can't be the answer because downsizing rarely has the effect of increasing productivity or even revenues; it's a cut back on losses, not an increase in profits
c. governments of some countries are likely to intervene and prevent the acquisition if downsizing is anticipated.
d. all of the above
e. A and C only

3)If revenues and costs are equally sensitive to exchange rate movements, MNCs may reduce their economic exposure by restructuring their operations to shift the sources of costs or revenues to other locations so that:
a. cash inflows exceed cash outflows in each foreign currency.
b. cash outflows exceed cash inflows in each foreign currency.
c. cash inflows match cash outflows in each foreign currency. revenues and costs are equally sensitive, so you want to match them - "equal" their sensitivities to the foreign outflow/inflow
d. none of the above

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.