When economic conditions of two countries are ____, an MNC would ____ its risk by operating in both countries instead of concentrating just in one.
A)highly correlated; reduce
B)not highly correlated; not reduce
C)not highly correlated; reduce
D)none of the above

Question

Quizplus · Accepted Answer

When economic conditions of two countries are not highly correlated, an MNC would reduce its risk by operating in both countries instead of concentrating just in one. This is because the MNC would benefit from diversification and not be overly exposed to risks in just one country. If the economic conditions were highly correlated, then operating in both countries would not necessarily reduce risk as the MNC could still be affected by economic conditions that affect both countries in a similar way. Therefore, option C is the best choice.

When Economic Conditions of Two Countries Are ____, an MNC