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.

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Definitions:

Yeast

A fungus that grows mainly as a single-celled organism and reproduces by budding.

Centrifuge

A machine that uses centrifugal force to separate substances of different densities or liquids from solids.

Glucometer

A medical device used for estimating the concentration of glucose in the blood, important for diabetes management.

Photometer

An instrument that measures light intensity.