An MNC May Deviate from Its Target Capital Structure in Each

question 19

True/False

An MNC may deviate from its target capital structure in each country where financing is obtained, yet still achieve its target capital structure on a consolidated basis.

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Definitions:

Foreign-Currency Exchange

The process of converting one currency into another currency, typically through a financial institution.

Exchange Rate

The value of one country's currency in terms of another's, used in foreign exchange markets to facilitate international trade.

Supply Of Dollars

The total amount of US dollars available in the global market, including cash and bank deposits.

Real Exchange Rate

The rate at which two currencies can be exchanged to purchase the same basket of goods and services, taking into account inflation rates of the involved countries.