Despite the Theoretical Elegance of This Hypothesis, Empirical Studies Have

question 62

Multiple Choice

Despite the theoretical elegance of this hypothesis, empirical studies have come to the opposite conclusion. Despite the favorable effect of international diversification of cash flows, bankruptcy risk was only about the same for MNEs as for domestic firms. However, MNEs faced higher costs for each of the following EXCEPT:

• A) agency costs.
• B) political risk.
• C) asymmetric information.
• D) In fact, each of these costs were higher for the MNE than for the domestic firm.

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Definitions:

Sentinel-Controlled While Loop

A loop that continues execution until a special value, known as a sentinel value, is encountered which terminates the loop.

Statement Above

A reference to a piece of code or comment mentioned in the preceding lines in a document or code.

Continue Statement

A control statement in programming that causes the loop to immediately jump to the next iteration of the loop.

Entry Condition

An entry condition is a precondition that must be true before entering a loop or function to ensure proper execution.