13. Companies can reduce loss from expropriation a. by expecting low returns fro

Question

13. Companies can reduce loss from expropriation a. by expecting low returns from high risk foreign subsidiaries. b. by establishing foreign subsidiaries in countries with volatile exchange rates c. by financing the foreign subsidiary using foreign currencies. d. by obtaining insurance against economic losses from expropriation. e. by investing all the funds in one foreign subsidiary 14. To determine the additional funds needed to support the level of forecasted operations, a. subtract the spontaneously generated funds from the sales forccast b. subtract all the operating costs from the sales forecast c. add the funds generated internally to the spontaneously generated funds d. subtract the funds generated internally from the required funds e. add the spontaneously generated funds to the retained earnings plus

Explanation / Answer

13) d is correct.

Many multinational companies buy insurance to protect against loss from expropriation.

14) d is correct.

AFN = Required Funds - Spontaneous Funds - Internal Funds

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