Question

Market segmentation and asymmetric information would help explain, which of the following:

Select one:

a. foreign investors do not have capital to invest

b. international investors lack skills to do research

c. domestic investors lack skills to do research

d. foreign investors lack information about the local markets and firms

A Multinational enterprise can ________ its ________ by acquiring access to markets which are less illiquid as well as less segmented than its own.

Select one:

a. decrease; Marginal Cost of Capital

b. none of the choices

c. increase; Marginal Cost of Capital

d. maintain; Marginal Rate of Return

In principle, Multinational firms would have a higher ________ than domestic firms because their cash flows would be more diversified internationally.

Select one:

a. equity ratios

b. capital investment

c. none of the choices

d. debt ratios

Relatively high cost of capital is more likely to occur in which of the following:

Select one:

a. Unsegmented domestic capital markets

b. Highly liquid domestic capital markets

c. None of the mentioned choices

d. Highly illiquid domestic capital markets

Answer 1

D. Foreign investors lack information about the local markets and firms

A. Decrease, marginal cost of capital

B. Capital investments

A. Unsegmented domestic capital markets