A firm's capital expenditures may be limited due to externally imposed constraints. All but which of the following are external constraints?

Question

Quizplus · Accepted Answer

Option A) The firm's loan agreement may contain restrictive constraints, which is an external constraint on capital expenditures.
Option C) If the firm has a weak financial position, it may be too expensive to float a new bond issue, which is also an external constraint on capital expenditures.
Option D) There may be market-imposed difficulties such as a tight money policy on the part of the Federal Reserve System, which is also an external constraint on capital expenditures.
Option B) is not an external constraint since the firm itself decides to place an upper limit on the amount of funds allocated to capital investment.

A Firm's Capital Expenditures May Be Limited Due to Externally