Question
Impact of derivatives on the design of global capital structure
Answer :
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Derivatives play a significant role in shaping the global capital structure of multinational corporations. They are financial instruments whose value is derived from underlying assets such as currencies, interest rates, commodities, or securities. By using derivatives like forwards, futures, options, and swaps, companies can manage risks associated with exchange rate fluctuations, interest rate volatility, and commodity price changes. This risk management capability allows firms to optimize their capital structure by reducing the uncertainty of cash flows and the cost of capital. In international business finance, derivatives enable companies to achieve
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