If a firm has a limited capital budget and too many good capital projects to fund them all, it is said to be facing the problem of
A) constrained capital.
B) capital rationing.
C) wealth optimization.
D) profitability.

Question

Quizplus · Accepted Answer

Capital rationing is the situation where a firm has to choose between various potential investment opportunities because it doesn't have enough budget to invest in all of them. This requires the firm to prioritize and allocate its limited capital budget to projects that offer the highest return on investment.

If a Firm Has a Limited Capital Budget and Too