If a Firm Can Borrow or Lend at a 10

question 2

Multiple Choice

If a firm can borrow or lend at a 10 percent annual interest rate,it will _____.

• A)buy all the units of capital with an expected rate of return above 10 percent.
• B)buy all the units of capital with an average rate of return above 0.1 percent.
• C)buy all the units of capital with an expected rate of return below 10 percent.
• D)buy all the units of capital with an average rate of return below 10 percent.
• E)select only the unit of capital with the highest expected rate of return, assuming it is above 10 percent.