Which of the Following Will Decrease the Rental Cost of Capital

question 35

Multiple Choice

Which of the following will decrease the rental cost of capital?

• A)an increase in the nominal interest rate
• B)an increase in the real interest rate
• C)an increase in the rate of depreciation
• D)an increase in the expected rate of inflation
• E)a decrease in the expected rate of inflation

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Definitions:

Marketable Securities

Financial instruments that can easily be sold or converted into cash at a value close to their market rate.

Precautionary Demand

Precautionary demand refers to the desire to hold cash or easily liquidatable assets to safeguard against unexpected financial needs or market fluctuations.

Unexpected Opportunities

Situations or prospects that arise unexpectedly, offering potential benefits or advantages not initially planned for.

Cash Conversion Cycle

A metric that shows the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.