Which of the Following Is a Valid Observation of the Cost

question 63

Multiple Choice

Which of the following is a valid observation of the cost of capital?

• A) The cost of capital is typically higher in the global capital market.
• B) Domestic capital markets have more liquidity than global markets.
• C) Local debt financing raises the cost of capital if liquidity is limited.
• D) A local sale of equity is preferred to global sale by international firms.

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Definitions:

World Price

The international market price of a good or service, influenced by global supply and demand conditions.

Domestic Supply

The total amount of goods and services provided by a country's own economy without importing from other countries.

Imported

Describes goods or services brought into one country from another for sale, usually regulated by import quotas and tariffs.

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, leading to a reduced cost per unit of output.