If a firm can borrow or lend at a 10 percent annual interest rate, it will _____.
A) buy all units of capital with an expected rate of return above 10 percent
B) buy all units of capital with an average rate of return above 10 percent
C) buy all units of capital with an expected rate of return below 10 percent
D) buy all units of capital with an average rate of return below 10 percent
E) select only the unit of capital with the highest expected rate of return, assuming it is above 10 percent
Correct Answer:
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