Of the Following, Which Is NOT Considered to Be a Disadvantage

question 13

Multiple Choice

Of the following, which is NOT considered to be a disadvantage to MNEs of having a financial structure adhere to local debt norms?

• A)Why adhere to local standards if, as an MNE, the firm has important competitive advantages relating to capital structure?
• B)Adhering to local standards may push the MNE consolidated financial ratios out of the optimal range.
• C)A localized financial structure makes it difficult for management to compare operating results with those of local competitors.
• D)All of the above are noted as disadvantages to having a localized capital structure.

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Definitions:

Constant Rate

A fixed rate that does not change over the specified period of time.

Expected Return

The average of a probability distribution of all possible returns that an investment might generate.

Dividend Yield

A financial metric indicating the annual dividend payment of a company as a proportion of its share price.

Constant Growth

A model, often referred to as the Gordon Growth Model, that assumes a firm's dividends grow at a consistent rate indefinitely, used to evaluate the fair value of a stock.