Segmented national capital markets are limiting firm's competitive advantage in sourcing capital because
A) there is liquid demand for all securities.
B) the yield on the debt securities are lower than in other mature capital markets.
C) FX risk is eliminated with different industry segmentation.
D) the cost and availability of capital can be constrained by excessive regulatory controls and perceived political risk.

Question

Quizplus · Accepted Answer

Segmented national capital markets can create barriers for firms seeking to access capital. Excessive regulatory controls and perceived political risk can limit the availability and increase the cost of capital, which can be a disadvantage for firms hoping to compete in the global market. While liquid demand and lower yields on debt securities are potential advantages of segmented markets, they do not outweigh the impact of regulatory and political barriers. FX risk can also be managed through hedging strategies and is not necessarily eliminated by market segmentation.

Segmented National Capital Markets Are Limiting Firm's Competitive Advantage in Sourcing