If a Firm Can Borrow Money at 0% Interest, Then

question 56

Multiple Choice

If a firm can borrow money at 0% interest, then

• A)the lender is irrational.
• B)its business investment is guaranteed to be profitable.
• C)present value and future value are equal.
• D)interest payments are deferred.

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Definitions:

Corporate Stock

Equity securities issued by corporations to raise capital, representing ownership interests in the company.

Investment

Involves allocating resources, usually money, with the expectation of generating an income or profit.

Income

The financial gain that an individual, business, or economy receives, usually in the form of money or other valuables, from various sources within a specified period.

Savings

The portion of income not spent on current consumption, often put aside for future use or investment.