The rental price of capital is determined by

Question

Quizplus · Accepted Answer

The rental price of capital, also known as the interest rate, is determined by the forces of supply and demand in capital markets. This rate reflects the cost of borrowing or using capital and serves to allocate capital to its most efficient uses. Equity and bond financing, as well as dividends paid out to stockholders, may influence the supply and demand for capital, but ultimately it is market forces that determine the rental price of capital.

The Rental Price of Capital Is Determined by