Explain the alternative hedging techniques of Leading & Lagging, Cross-Hedging and Currency Diversification

b) Bronco Corp. has decided to establish a subsidiary in Taiwan that will produce stereos and sell them locally in the country. It expects that its cost of producing these stereos will be one third the cost of producing them in the United States. Assuming that its production cost estimates are accurate, is Bronco's strategy sensible? Explain.

c) List some forms of political risk other than a takeover of a subsidiary by the host government, and briefly elaborate on how each factor can affect the risk to the MNC. Identify common financial factors for an MNC to consider when assessing country risk. Briefly elaborate on how each factor can affect the risk to the MNC.

d) Explain the benefits of netting. How can a centralized cash management system be beneficial to the MNC?

e) Why are valuations of privatized businesses previously owned by the governments of developing countries more difficult than valuations of existing firms in developed countries? Name and explain the seven reasons.