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10 Cards in this Set
- Front
- Back
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EXTERNAL SOURCES OF DEBT
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domestic bond offering
global bond offering private placement of bonds loans from financial institutions |
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EXTERNAL SOURCES OF EQUITY
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domestic equity offering
global equity offering private placement of equity |
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An MNC's capital structure decision involves the choice of
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debt versus equity financing
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INFLUENCE OF CORPORATE CHARACTERISTICS
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stability of MNC'S cash flows
MNC's credit risk MNC's access to retained earnings MNC'S guarantees on debt MNC's agency problems |
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INFLUENCE OF HOST COUNTRY CHARACTERISTICS
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interest rates in host countries
strength of host country currencies country risk in host countries tax laws in host countries |
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COST OF CAPITAL
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cost of debt
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COST OF CAPITAL VERSUS DOMESTIC FIRMS
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size of firm
access to international capital markets international diversification exposure to exchange rate risk exposure to country risk |
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COST OF EQUITE COMPARISON USING THE CAPM
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1. risk-free rate of interest
2. market rate of return 3.stock beta |
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COUNTRY DIFFERENCES IN THE COST OF DEBT
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differences in the risk-free rate
differences in the credit risk premium comparative costs of debt across countries |
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COUNTRY DIFFERENCES IN THE COST OF EQUITY
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differences in the risk-free rate
differences in the equity risk premium |
