The valuation of an MNC should rise when an event causes the expected cash flows from foreign subsidiaries to ____ and when the foreign currencies denominating these cash flows are expected to ____.
A) decrease; appreciate
B) increase; appreciate
C) decrease; depreciate
D) increase; depreciate

Question

​The valuation of an MNC should rise when an event causes the expected cash flows from foreign subsidiaries to ____ and when the foreign currencies denominating these cash flows are expected to ____.
A) ​decrease; appreciate
B) ​increase; appreciate
C) ​decrease; depreciate
D) ​increase; depreciate

Quizplus · Accepted Answer

When the expected cash flows from foreign subsidiaries increase, it indicates that the MNC is performing well in those markets and thus the valuation should rise. Additionally, when the foreign currencies denominating these cash flows appreciate, it leads to higher profits for the MNC when converted into the domestic currency, which also contributes to the rise in valuation.

​The Valuation of an MNC Should Rise When an Event

The Valuation of an MNC Should Rise When an Event