Higher Interest Rates

question 33

Multiple Choice

Higher interest rates

• A)Decrease the quantity of loanable funds.
• B)Decrease the level of risk.
• C)Increase the quantity of loanable funds.
• D)Increase the level of risk.

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Definitions:

Full Capacity

Full capacity refers to the maximum level of output that a company can sustain over a period, utilizing all available resources efficiently.

External Financing Needed

The amount of funding a company must seek from outside sources to finance its planned activities when internal cash flow is insufficient.

Profit Margin

This financial ratio measures the amount of net income earned with each dollar of sales by comparing net income to net sales.

Full-capacity Sales

The maximum sales level a company can achieve with its current operational assets without additional investment.