At any given time, the firm's financing costs and investment returns will be affected by the volume of financing and investment undertaken.

Question

Quizplus · Accepted Answer

This is true because financing costs are incurred when a firm takes on debt, and investment returns are earned when a firm invests in projects or assets. The amount of financing and investment that a firm undertakes will impact the level of financing costs and investment returns it incurs. For example, if a firm takes on a large amount of debt to finance its investments, its financing costs will be higher and its investment returns will need to be higher to cover those costs. Conversely, if a firm invests a smaller amount of money, its financing costs will be lower and its investment returns may be lower as well.

At Any Given Time, the Firm's Financing Costs and Investment