To say that the investing decision and financing decision of a firm are separable is to say ________.
A)that firms first select what products or services they will produce and then select how best to finance these products or services
B)that firms first select how best to finance products or services and then select what products or services they will produce
C)that firms first select what services they want and then what products they will produce
D)that firms first select what products they will produce and then what services they want

Question

Quizplus · Accepted Answer

The concept that investing decisions (what products or services to produce) and financing decisions (how to finance these products or services) are separable suggests that firms prioritize deciding on the products or services they will offer before determining the best way to finance these ventures. This approach allows for a clear focus on the business's core objectives before addressing the financial strategies to support these objectives.

To Say That the Investing Decision and Financing Decision of a Firm