Response to the following:
1. Cost of Capital
Explain how characteristics of MNCs can affect the cost of capital.
2. Capital Structure and Agency Issues
Explain why managers of a wholly owned subsidiary may be more likely to satisfy the shareholders of the MNC.
3. Target Capital Structure
LaSalle Corp. is a U.S.- based MNC with subsidiaries in various less devel- oped countries where stock markets are not well es- tablished. How can LaSalle still achieve its "global" target capital structure of 50 percent debt and 50 percent equity, if it plans to use only debt ?- nancing for the subsidiaries in these countries?