The valuation of an MNC is reduced if the required return on its investments in foreign countries is reduced.

Question

Quizplus · Accepted Answer

The valuation of an MNC (multi-national corporation) is typically positively related to its profitability as well as its growth opportunities. The required return on its investments in foreign countries is of importance in assessing the potential risks and returns of its international operations. However, a reduction in the required return would lower the perceived risk and may lead to an increase in the valuation of the MNC. Hence, the statement is false.

The Valuation of an MNC Is Reduced If the Required