Suppose that you can hold cash that pays no interest or invest in securities that pay interest
Question:
a. You are unusually uncertain about future cash flows.
b. The interest rate on bank loans rises to 11%.
c. The interest rates on securities and on bank loans both rise by the same proportion.
d. You revise downward your forecast of future cash needs.
Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...
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Related Book For
Principles of Corporate Finance
ISBN: 978-0077404895
10th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen
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