16. When a foreign subsidiary returns money to its domestic parent, this is call

Question

16. When a foreign subsidiary returns money to its domestic parent, this is called ____________.

a Transfer pricing

b Expropriation

c Repatriation

d Fiat

17. ____________ money is backed by faith in the issuer.

a Commodity

b Fiat

c Gold

d Specie

18. Which of the following is NOT given as a reason for merger activity in the U.S.?

a.         Synergistic benefits arising from mergers.      

b.         Increased market power and a reduction in competition resulting from mergers.        

c.         Attempts to stabilize earnings through diversification.

d.         Making an acquisition tends to increase the acquiring company's stock price.

19. Which of the following statements is FALSE?

a.         Leveraged buyouts (LBOs) occur when a firm issues equity and uses the proceeds to take a firm public.

b.         In a typical LBO, shareholders do well but bondholders realize a decline in value.

c.         Firms often sell assets following a leveraged buyout.

d.         A lot of the risk in an LBO is due to the heavy use of debt to finance the merger.

20. Which statement is FALSE?

a A joint venture is when two or more firms partner up in order to own a third firm.

b In a Spin-off, common stock in a division or subsidiary is distributed to shareholders of the parent company on a pro rata basis.

c If the shareholders gain from a merger comes at the expense of other stakeholders, then this is called hubris

d A tender offer is when the acquiring firm makes their offer directly to the target firm shareholders.

Explanation / Answer

Answer: 16

The correct answer is option c (Repatriation).

Explanation

When the foreign subsidiary return money or a portion of earnings to parent company as per the norms of foreign country (host country) and domestic country (the U.S.) is called repatriation. In repatriation cash moves foreign subsidiary to domestic parent company.

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