The process of investing in projects that are most likely to be profitable within limited capital availability is called __________?
Correct answer: D. Capital Rationing
- A. Capital Structure
- B. Debt Structure
- C. Asset Structure
- D. Capital Rationing
Explanation
Capital rationing is the process of selecting the most profitable investment projects when available capital is limited. Capital structure instead concerns the mix of debt and equity used to finance the business.
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About Business Finance
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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