A fiRm That Cannot Raise Funds in the fiNancial Markets

question 32

True/False

A firm that cannot raise funds in the financial markets in order to finance positive NPV projects is
said to face soft capital rationing.

---

Definitions:

Continental Rifts

Areas where the Earth's crust is stretching and splitting apart, leading to the formation of new oceanic crust.

Felsic

Refers to igneous rocks that are rich in silica and light in color, including granite and rhyolite.

Mafic Magma

Refers to a type of magma that is rich in magnesium and iron, characterized by its dark color and low viscosity.

Subduction Zones

Areas where one tectonic plate is being forced down into the mantle by another plate, often associated with volcanic activity and earthquakes.