An Investment Decision Differs from a Financing Decision in That

question 100

Multiple Choice

An investment decision differs from a financing decision in that:

• A) investment decisions relate to assets that the firm has invested in, while financing decisions relate to the firm's financial assets.
• B) an investment decision first determines what assets the firm will invest in, while a financing decision considers if the existing investments should be refinanced.
• C) a financing decision first determines what financial assets the firm will invest in, while an investment decision considers how the funds will be invested.
• D) an investment decision first determines what assets the firm will invest in, while a financing decision considers how the investments under consideration are to be funded.

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Definitions:

Commodity Prices

The market prices for raw materials or primary agricultural products that are traded on exchanges.

Exchange Rates

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.

Interest Rates

The cost of borrowing money or the return earned on an investment, usually expressed as a percentage.

Inflation

The rate at which the general level of prices for goods and services is rising, and, consequently, purchasing power is falling.