Empirical Studies Indicate That WACC for an MNE Is Higher

question 57

Multiple Choice

Empirical studies indicate that WACC for an MNE is higher than for their domestic competitors. Reasons cited for this increased cost include all of the following EXCEPT:

• A) agency costs.
• B) foreign exchange risk.
• C) political risk.
• D) All of the above are cited as reasons for an MNE's increased WACC.

---

Definitions:

Constant Debt

A situation where an individual, organization, or country continually carries a financial obligation without significant reduction over time.

President Andrew Johnson

17th President of the United States, who served from 1865 to 1869, known for his efforts to quickly restore the Southern states after the Civil War, which led to his impeachment.

Radical Republican

Members of the Republican Party in the 19th century United States who advocated for the complete eradication of slavery and equal rights for freed slaves.

Fourteenth Amendment

An amendment to the United States Constitution, ratified in 1868, that grants citizenship to all persons born or naturalized in the U.S., including formerly enslaved people, and provides all citizens with equal protection under the laws.