Question 22: One argument for why subsidiaries should be wholly owned by the parent is that:, A) the potential conflict of interests between the MNC’s managers and shareholders is avoided., B) the potential conflict of interests between the MNC’s majority shareholders and minority shareholders is avoided., C) the potential conflict of interests between the MNC’s existing creditors is avoided., D) the potential conflict of interests between the MNC’s managers and creditors is avoided.,Question 23: Which of the following is not a reason the cost of debt can vary across countries?,A) differences in the risk-free rate.,B) a high price/earnings multiple.,C) differences in the risk premium.,D) differences in demographics.,Question 24: _______ are beneficial because they may reduce transaction costs. However, MNCs may not be able to obtain all the funds that they need.,A) Private placements,B) Domestic equity offerings,C) Global equity offerings,D) Global debt offerings,Question 25 : Assume the U.S. financing rate is 10 percent and that the financing rate in Germany is 9 percent. An MNC would be indifferent between financing in dollars and financing in euros next year if the euro is expected to _______.,A) appreciate by 0.92%.,B) depreciate by 0.92%.,C) appreciate by 1.00%.,D) depreciate by 1.00%.,,,,,
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