The Investment-Demand Curve Will Shift to the Left

question 140

Multiple Choice

The investment-demand curve will shift to the left:

• A)if firms plan to increase their inventories.
• B)if firms plan to decrease their inventories.
• C)if firms expect an increase in their sales.
• D)if firms expect no change in their sales.

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Definitions:

WACC

The Weighted Average Cost of Capital represents a formula used to assess a company's cost of capital, with each type of capital being weighted according to its proportion.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows or to discount a future investment.

Risk Class

Categories of assets or investments grouped together based on the level of risk and return characteristics they possess.

Cost of Equity

The theoretical disbursement a firm makes to its equity stakeholders as remuneration for the risk they bear by putting their capital into the business.