20. When an MNC's firm's cost of capital rises, it would be _______ likely to divest an
existing project, other things held constant.
C) neither; there is no effect
D) neither; MNCs do not ever divest projects
21. Which of the following is not a factor that favorably affects an MNC's cost of capital,
according to your text?
22. According to your text, which of the following is not a factor that affects an MNC's cost
of capital unfavorably?
23. The ____________ an MNC, the __________ its cost of capital is likely to be.
24. MNC Corporation has a beta of 2.0. The risk-free rate of interest is 5%, and the return on
the stock market overall is expected to be 13%. What is the required rate of return on
E) none of the above
SOLUTION: 5% + 2 (13% - 5%) = 21%.