Which of the following is not a characteristic that favorably affects an MNC's cost of capital, compared to the cost of capital for a domestic firm?
A) the MNC's exposure to exchange rate risk
B) the MNC's size
C) the MNC's access to international capital markets
D) the MNC's international diversification

Question

Quizplus · Accepted Answer

Exposure to exchange rate risk increases uncertainty and can make the cost of capital higher for an MNC compared to a domestic firm. The other characteristics listed - size, access to international capital markets, and international diversification - all generally lead to a lower cost of capital for an MNC.

Which of the Following Is Not a Characteristic That Favorably