(I)In a competitive capital market,private investors have a strong incentive to evaluate projects carefully and allocate their funds toward those projects expected to yield the highest rates of return.
(II)Profitable projects will tend to increase both the wealth of the investor and of the nation.

Question

Quizplus · Accepted Answer

In a competitive capital market, private investors have a strong incentive to evaluate projects carefully and allocate their funds toward those projects expected to yield the highest rates of return. This implies that profitable projects will be preferred, leading to the growth of investor's wealth and that of the country. Therefore, both statements I and II are true.

(I)In a Competitive Capital Market,private Investors Have a Strong Incentive