Capital Rationing Is Generally a Positive Action for a Firm

question 99

True/False

Capital rationing is generally a positive action for a firm because it prevents rapid growth, which can drive up the cost of capital.
Capital rationing is used for "macromanagement" purposes, including debt constraints or economic concerns. It is generally considered a negative action since it can impede achieving maximum profitability.

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Definitions:

Instances

Specific examples or occurrences of a particular event, situation, or phenomenon.

Subjective Utility

An individual's perceived value or satisfaction obtained from consuming goods or services.

Individual's Willingness

Refers to the level of readiness or eagerness a person has to engage in a particular behavior or action.

Outcome

The result or effect of an action, situation, or event; the consequence or end-result.