A foreign branch is an extension of the parent company and is not a separate legal entity. The parent company is fully responsible for the liabilities and profits of the foreign branch. Option B refers to a subsidiary, not a branch. Option C differentiates between a minority foreign subsidiary and a controlled foreign corporation, which are both types of subsidiaries, not branches.

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A Foreign Branch Is

Question 11

Multiple Choice

A foreign branch is:

A) an extension of the parent and is not an independently incorporated firm separate from the parent.
B) an affiliate organization of the MNC that is independently incorporated in the foreign country, and one in which the U.S. MNC owns at least 10 percent of the voting equity stock.
C) either a minority foreign subsidiary (an uncontrolled foreign corporation) or a controlled foreign corporation.
D) None of these.

Correct Answer: