When fiRms Do Not Have Sufficient Available fiNancing to Invest

question 310

Multiple Choice

When firms do not have sufficient available financing to invest in all of the positive net present value projects they have identified, _____ is (are) said to exist.

• A) excess financing
• B) contingency options
• C) strategic options
• D) managerial options
• E) capital rationing

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Definitions:

Future Sum

Refers to the value of a current asset at a specified date in the future based on an assumed rate of growth or interest.

Mutual Fund

An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market devices, and other assets.

Retirement

The act of leaving one's job and ceasing to work, usually upon reaching a certain age or for health reasons, often marked by receiving pension or retirement savings.

Annual Withdrawal

Annual withdrawal often refers to the amount of money an individual elects to take out of an investment or savings account each year, potentially for retirement living expenses.