If the demand of loanable demands decrease then the borrowing cost of funds is ________?
Correct answer: B. lower
- A. upside
- B. lower
- C. higher
- D. zero
Explanation
A decrease in demand for loanable funds reduces competition among borrowers, so lenders charge a lower borrowing cost. The cost would rise when demand increased, not decreased.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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