An MNC's cost of capital may differ from that of domestic firms because of their access to international capital markets, their exposure to exchange rate risk, and other characteristics.

Question

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MNCs have access to international capital markets, which may offer a different cost of capital due to various factors such as differing interest rates, political and economic stability, and currency risks. Additionally, MNCs have to deal with exchange rate risk, which may affect their cost of capital differently than domestic firms. Therefore, the cost of capital for MNCs can be different from that of domestic firms.

An MNC's Cost of Capital May Differ from That of Domestic