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lara31 [8.8K]
2 years ago
13

The capital structures of MNCs are influenced by​ ________. A. dividends paid by corporations B. domestic futures markets C. the

overall relationship between the public and private sectors in home country D. international diversification
Business
1 answer:
Galina-37 [17]2 years ago
3 0

Answer:

D. international diversification

Explanation:

The Multinational corporations can reduce their risk by international diversification and reduced risk can increase debt capacity of MNC. The higher capacity to meet scheduled debt payment also reduces cost of capital.

The effect of international diversification on capital structure can be explained through

1. Co-insurance effect: Combining businesses with international firms provides reduction in operating risk and thereby increase debt capacity. This helps MNCs to include more debts in their capital structure.

2. Transaction cost theory. Internationalization is a way of   internatilize   intangible assets. Since intangible assets are not difficult to sale , international diversification helps MNCs to exploit their intangible assets. So MNCs with an eye of international diversification will try to   develop these type of assets in their asset base.

3.Agency cost argument: MNCs will have high agency costs Diversification helps to reduce these agency costs International diversification creates larger markets and generates growth opportunities. Growth opportunities and debt ratios are inversely proportional .MNCs with higher growth opportunities will rely on equity rather than debt.

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What are 3 ways that the brain learns
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✿━━━━@♥ℳg━━━━✿

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Answer:

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2 years ago
Concord Corporation owned 16000 shares of Ivanhoe Corporation. These shares were purchased in 2017 for $130000. On November 15,
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Answer:

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Explanation:

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Net reduction in retained earnings:

= Dividends payable - Gain

= (13,000 * 29) - ‭271,310‬

= $‭105,690‬

4 0
2 years ago
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