If a parent MNC backs the debt of a foreign subsidiary, the borrowing capacity of the parent might be reduced because creditors may not be willing to provide as many funds to the parent if those funds may possibly be needed to rescue the subsidiary.
Correct Answer:
Verified
Q1: The capital asset pricing model (CAPM) suggests
Q3: An MNC's cost of equity is unrelated
Q4: When assuming that investors in the United
Q5: The cost of an MNC's capital can
Q6: There is an advantage to using equity
Q7: It is always advantageous to use foreign
Q8: When MNCs pursue international projects that have
Q9: In the United States, government rescues of
Q10: Since the cost of funds can vary
Q11: Normally, each subsidiary of an MNC will
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents