In general, MNCs probably prefer to use ____ foreign debt when their foreign subsidiaries are subject to potentially ____ local currencies.
A)more; strong
B)more; weak
C)less; strong
D)less; weak
E)B and C

Question

Quizplus · Accepted Answer

MNCs may prefer to use more foreign debt when their foreign subsidiaries are subject to potentially weak local currencies because the debt becomes cheaper to service in their home currency terms. Conversely, they might prefer to use less foreign debt when facing potentially strong local currencies to avoid increased costs in home currency terms.

In General, MNCs Probably Prefer to Use ____ Foreign Debt