When a US-Based MNC Has a Subsidiary in Mexico That Needs Financing

Multiple Choice

When a U.S.-based MNC has a subsidiary in Mexico that needs financing, the MNC's exposure to exchange rate risk can be minimized if:

A) the parent issues dollar-denominated equity and provides the proceeds to the subsidiary.
B) the parent provides its retained earnings to the Mexican subsidiary.
C) the subsidiary obtains a dollar-denominated loan from a financial institution.
D) the subsidiary obtains a peso-denominated loan from a financial institution.