If the Interest Rate Increases,_____

question 118

Multiple Choice

If the interest rate increases,_____

• A)the cost of saving will increase.
• B)the cost of borrowing will increase.
• C)a firm should decrease the amount of capital it owns.
• D)a firm should acquire more capital.
• E)the supply of loanable funds will increase.

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Definitions:

Average Common Stockholders' Equity

The average equity stake held by common shareholders within a company, assessed over a specific period.

Net Income

Profit remaining after all operating expenses, interest, taxes, and dividends have been deducted from total revenue.

Acid-test

A financial ratio that measures a company's ability to pay off its current liabilities with its quick assets.

Inventory Turnover

A metric that indicates the frequency at which a firm's stock is sold and restocked within a given timeframe, highlighting the effectiveness of its inventory control.