Asked by sandra anighoro on Jul 15, 2024
Verified
The demand for new capital depends on the interest rate.
Interest Rate
The fraction of a loan amount charged as interest to the borrower, often shown as an annual percent of the outstanding loan.
New Capital
Additional funds or assets put into a business by the owners or investors intended for the expansion or improvement of the enterprise.
- Comprehend the impact of fluctuations in market interest rates on the investment choices made by companies.
- Identify factors that stimulate or slow down investment in varying interest rate environments.
Verified Answer
JA
Jenyce AmaralJul 17, 2024
Final Answer :
True
Explanation :
The demand for new capital is inversely related to the interest rate because lower interest rates make borrowing cheaper, encouraging investment in new capital, while higher rates do the opposite.
Learning Objectives
- Comprehend the impact of fluctuations in market interest rates on the investment choices made by companies.
- Identify factors that stimulate or slow down investment in varying interest rate environments.