Investments
A)are more profitable when interest rates rise.
B)are less profitable when interest rates rise.
C)are more profitable when economic rents rise.
D)are less profitable when economic rents rise.

Question

Quizplus · Accepted Answer

When interest rates rise, the cost of funds increases, which in turn reduces profitability of investments. Therefore, option B is the correct answer. Option A is incorrect because higher interest rates negatively affect profitability. Option C is incorrect because economic rents are not directly related to profitability of investments. Option D is also incorrect, as higher economic rents can potentially increase profitability.