1. Higher share prices can stimulate business investment because:
A. he firm’s market value is less than its replacement cost.
B. it lowers the cost of external financing.
C. the firm receives 100 percent of the increase in stock values.
D. this lowers the cost of internal financing and the firm receives 100 percent of the increase in stock values.
2. You are borrowing money to buy a car. If you can make payments of $260 per month starting one month from now at an interest rate of 9%, how much will you be able to borrow for the car today if you finance the amount over 4 years?
A. $6,269
B. $12,538
C. $14,627
D. $10,448