Question

Identify two methods of financing that MNC uses

Answer 1

Two most common method which are used by a multi national company to raise finance are-

1.Equity Financing in exchange for cash  - MNCs issue the equity share in exchange of cash through stock markets across different countries of the world.

Various Companies with nexus to their investment bankers analyse different global scenarios and issue the equity share across different markets at appropriate time . MNCs have the advantage of operating globally and they can raise capital from diffrent parts of the world through this method.

2.Selling of debt securities- MNCs raise capital globally through selling of the bonds across diffferent markets, which is a form of debt financing .Another type of debt financing is selling of commercial paper .It is required to be complied with different regulations which are more strict than that of equity markets as debtholders are treated as creditors.

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