Investing in foreign subsidiaries can be less risky when:

a.the exchange rates are volatile.

b.there is international diversification.

c.the host country has higher tax rates.

d.the host country is politically unstable.

e.laws to repatriate earnings are complex.

Companies can reduce loss from expropriation:

a.by expecting low returns from high risk foreign subsidiaries.

b.by obtaining insurance against economic losses from expropriation.

c.by establishing foreign subsidiaries in countries with volatile exchange rates.

d.by investing all the funds in one foreign subsidiary.

e.by financing the foreign subsidiary using foreign currencies.