As the financing of a foreign project by the parent ____ relative to the financing provided by the subsidiary, the parent's exchange rate exposure ____.
A) increases; decreases
B) decreases; increases
C) increases; increases
D) None of these are correct.

Question

Quizplus · Accepted Answer

When the parent company increases its financing of a foreign project relative to the financing provided by the subsidiary, both the parent's involvement and exposure to exchange rate fluctuations increase, as it has more at stake in the foreign currency.

As the Financing of a Foreign Project by the Parent