Question:1

A multinational corporation has a subsidiary in a country with high political instability. Which source of financing is best, if any?

Debt financing by the parent

Equity financing by the parent

Debt financing from local banks in the host country

All sources are equally good

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Question:2 , Which of the following factors are likely to decrease the weighted average cost of capital for a multinational corporation compared to a domestic firm?

Check all that apply:

Exposure to country risk

International diversification

Exposure to exchange rate risk

Access to international capital markets

Large size

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