The capital structures of MNCs are influenced by ________.
A) domestic futures markets
B) international diversification
C) the overall relationship between the public and private sectors in home country
D) dividends paid by corporations

Question

Quizplus · Accepted Answer

The capital structures of MNCs are influenced by international diversification. MNCs operate in different countries, and each country has a different capital market with varying levels of risk and return. Therefore, MNCs must consider the cost of capital in each country and determine the optimal mix of debt and equity to finance their operations. International diversification allows MNCs to access capital markets in different countries, which helps them to optimize their capital structure and lower their cost of capital.

The Capital Structures of MNCs Are Influenced by ________