If a Firm Is Experiencing No Capital Rationing, It Should

question 93

Multiple Choice

If a firm is experiencing no capital rationing, it should accept all investment proposals

• A) as long as it has available funds.
• B) that return an amount equal to or greater than the cost of capital.
• C) that return an amount greater than the cost of equity.
• D) that are available, regardless of return.

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Definitions:

Bond Ratings

Assessments of the creditworthiness of corporate or governmental bonds, reflecting the issuer's ability to make bond payments, issued by rating agencies.

Creditworthiness

An assessment of a borrower's ability to repay debts in a timely manner, typically considered by lenders before issuing credit.

Investment Grade

A rating that indicates a bond or other security is considered low risk by rating agencies, making it an attractive investment for conservative investors.

Yield To Maturity

The total return anticipated on a bond if it is held until the maturity date, considering all interest payments and the principal.