Corporations, for tax purposes, may decide to keep their profits in a foreign country or to transfer them to their corporate headquarters in their home country. The decision of what to do is often a matter of __________.*

Question

Quizplus · Accepted Answer

The decision of whether to keep profits in a foreign country or transfer them to the home country is often based on currency risk. Keeping profits in a foreign country may expose the corporation to fluctuations in exchange rates, whereas transferring profits to the home country may reduce this risk.

Corporations, for Tax Purposes, May Decide to Keep Their Profits