The term "local target capital structure" is used in the text to represent:
A) the average capital structure of local firms where the MNC's subsidiary is based.
B) the average capital structure of local firms where the MNC's parent is based.
C) the desired capital structure of a subsidiary of a particular MNC.
D) the desired capital structure of a particular MNC overall (including all subsidiaries).

Question

Quizplus · Accepted Answer

The term "local target capital structure" refers to the desired capital structure of a subsidiary of a particular MNC, specifically the capital structure that is optimal for that subsidiary given its local market and operating conditions. It is not representative of the capital structures of local firms where the MNC's parent or subsidiary is based, nor is it necessarily reflective of the desired capital structure of the MNC as a whole.

The Term "Local Target Capital Structure" Is Used in the Text