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 will reduce the dollar value of the subsidiary's costs more than its revenues, potentially increasing the overall value of the MNC.

Assume That the Japanese Yen Is Expected to Depreciate Substantially