Which Three of the Following Could Result If the Cost

question 3

Multiple Choice

Which three of the following could result if the cost of capital as a discount rate is too high?

• A) Shareholders will miss out on value- enhancing opportunities.
• B) Firms will not grow as they should.
• C) Investment will be constrained.
• D) Bank lending is likely to fall as a proportion of investment levels.

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Definitions:

Sympathetic

Referring to the part of the autonomic nervous system that is responsible for preparing the body for physical activity and coping with stress.

Parasympathetic

Relates to the part of the autonomic nervous system responsible for conserving energy and slowing down the body's responses, in contrast to the sympathetic nervous system, which stimulates activities.

Adrenal Glands

Endocrine glands, located on top of each kidney, that secrete hormones and affect metabolism.

Synaptic Cleft

The space between neurons.