The situation that exists when a ﬁrm has no means of ﬁnancing its positive net present value projects is referred to as:
A) Financial stop-loss.
B) Contingency planning.
C) Marginal loss planning.
D) Soft rationing.
E) Hard rationing.

Question

Quizplus · Accepted Answer

The situation described refers to a scenario of limited or no funding availability for profitable projects, which is known as hard rationing. Soft rationing occurs when a firm prioritizes funding based on subjective criteria. Financial stop-loss, contingency planning, and marginal loss planning are not related to the described scenario.

The Situation That Exists When a ﬁRm Has No Means