Final answer:
The claim that a weak home currency leads to smaller remittances when converted is false. A strong home currency relative to the foreign currency actually results in more home currency when funds are repatriated. The exchange rate plays a crucial role in determining the converted amount.
Step-by-step explanation:
The statement, "When the parent's home currency is weak, remitted funds from foreign subsidiaries will convert to a smaller amount of the home currency," is false. When a foreign currency is weak in comparison to the parent's home currency, the funds remitted back to the home country will actually translate into more of the home currency because it has a stronger value. This is similar to the scenario where a foreign investor converts their home currency into U.S. dollars to make an investment; if the U.S. dollar strengthens in the meantime, the investor will receive more home currency upon conversion back than originally anticipated.
Conversely, when a parent's home currency is strong (which means the foreign currency is weak compared to it), the remittances from abroad will indeed convert to more of the home currency, thereby increasing the value repatriated. This can be particularly important for companies that operate internationally and must manage exchange rate risks. The demand for the country's currency and the exchange rates are essential factors that determine how much the foreign funds convert to in the home currency.