When MNCs pursue international projects that have a high potential for return, but also increase their risk, this increases the return to the bondholders that provided credit to the MNCs.

Question

Quizplus · Accepted Answer

When MNCs pursue high-risk international projects, the increased risk primarily benefits shareholders if the projects succeed, as they have a residual claim on profits after all debts are paid. Bondholders have a fixed interest rate return, and their returns do not directly increase with the firm's riskier ventures.

When MNCs Pursue International Projects That Have a High Potential