Determine key reasons why a multinational corporation might decide to borrow in a country such as...
Determine key reasons why a multinational corporation might decide to borrow in a country such as Brazil, where interest rates are high, rather than in a country like Switzerland, where interest rates are low. Provide support for your rationale.
Homework Answers
- Currency appreciation could stand out as a factor where an MNC can borrow because basic monetary unit of Brazil may get depreciated and can be inexpensive.
- Purchase of Brazilian assets can result into higher earnings in the markets, which can contribute to the reason why an MNC can choose to borrow in a country like Brazil. This relatively reduces the chances of hurting it's finance by exposing to the exchange currency trade risk.
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