An MNC's cost of capital may differ from that of domestic firms because of the MNC's access to international capital markets, its exposure to exchange rate risk, and other characteristics.

Question

Quizplus · Accepted Answer

Multinational corporations have access to international capital markets, which can have different interest rates and risk profiles compared to domestic markets. Additionally, MNCs may face exposure to exchange rate risk due to their operations in multiple countries. These factors can all affect the cost of capital for an MNC and may differ from that of domestic firms.

An MNC's Cost of Capital May Differ from That of Domestic