Assume that the Japanese yen is expected to depreciate substantially over the next year. The U.S.-based MNC has a subsidiary in Japan, where its costs exceed revenues. The overall value of MNC will ____ because of the yen's depreciation.
A) decrease
B) increase
C) remain unchanged
D) A and C are possible

Question

Quizplus · Accepted Answer

The depreciation of the yen means that the subsidiary's costs in yen will translate to fewer dollars, potentially reducing the overall losses when converted to the parent company's currency, thus increasing the overall value of the MNC.

Assume That the Japanese Yen Is Expected to Depreciate Substantially