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

Question

Quizplus · Accepted Answer

When an event causes the expected cash flows from foreign to increase, it means the MNC's foreign subsidiaries are expected to bring in more cash, increasing the overall cash flows of the company. This will lead to an increase in the MNC's valuation. 
If foreign currencies denominating these cash flows are expected to appreciate, it means that when the cash flows are converted into the MNC's reporting currency, they will be worth more, leading to higher cash flows and an increase in the company's valuation.

The Valuation of an MNC Should Rise When an Event