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Assume that you have a subsidiary in Australia. The subsidiary sells mobile homes to local consumers in Australia, who buy the homes using mostly borrowed
Assume that you have a subsidiary in Australia. The subsidiary sells mobile homes to local consumers in Australia, who buy the homes using mostly borrowed funds from local banks. Your subsidiary purchases
all of its materials from Hong Kong and pays Hong Kong dollar. The Hong Kong dollar is tied to the US dollar. Your subsidiary borrowed funds from the US parent, and must pay the parent $ in interest
each month. Australia has just raised its interest rate in order to boost the value of its currency Australian dollar
The subsidiary's cost of purchasing materials measured in Australian dollar will
A increase
B decrease
C not change
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