Other things being equal, the financial leverage of MNCs will be higher if the governments of their home countries are ____ likely to rescue them (in the event of failure), and if their home countries are ____ likely to experience a recession.
A) more; more
B) less; more
C) less; less
D) more; less

Question

Other things being equal, the financial leverage of MNCs will be higher if the governments of their home countries are ____ likely to rescue them (in the event of failure), and if their home countries are ____ likely to experience a recession.​
A) ​more; more
B) ​less; more
C) ​less; less
D) ​more; less

Quizplus · Accepted Answer

MNCs (Multinational Corporations) will have higher financial leverage if their home governments are more likely to rescue them in case of failure, as this reduces the perceived risk of borrowing. Additionally, if their home countries are less likely to experience a recession, the overall economic stability makes it safer to use debt financing, thus encouraging higher leverage.

Other Things Being Equal, the Financial Leverage of MNCs Will