Investing in foreign subsidiaries can be less risky when:
A) laws to repatriate earnings are complex.
B) the host country has higher tax rates.
C) the host country is politically unstable.
D) the exchange rates are volatile.
E) there is international diversification.

Question

Quizplus · Accepted Answer

Investing in foreign subsidiaries can be less risky when there is international diversification. This means that the company is investing in multiple countries or regions, reducing the impact of any negative events in one particular country. Therefore, choice E is the best answer. The other options listed - complex repatriation laws, higher tax rates in the host country, political instability, and volatile exchange rates - all increase the risk of investing in foreign subsidiaries.

Investing in Foreign Subsidiaries Can Be Less Risky When