"Firms Borrow to Fund an Investment If and Only If

question 151

Essay

"Firms borrow to fund an investment if and only if the expected return on the investment is greater than the interest rate on the loan." Explain this statement.

---

Definitions:

Rubella Virus

A contagious virus causing rubella (German measles), characterized by a rash and fever, important for its danger to pregnant women due to potential birth defects.

Embryo

An early stage of development in multicellular organisms, in humans, it refers to the period from fertilization until the end of the eighth week of gestation.

Rods

Photoreceptor cells in the retina of the eye that are highly sensitive to light and enable vision in low-light conditions.

Cones

Photoreceptor cells in the retina of the eye that function best in relatively bright light and provide the ability to perceive color and fine detail.