Firms which maintain an adequate reserve borrowing capacity will be able to borrow money at reasonable cost when good investment opportunities arise.

Question

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Maintaining an adequate reserve borrowing capacity allows firms to borrow money at reasonable cost when good investment opportunities arise, as they have the financial flexibility to take advantage of these opportunities. Without this reserve capacity, firms may be forced to borrow at higher rates or not be able to borrow at all, potentially missing out on profitable ventures.

Firms Which Maintain an Adequate Reserve Borrowing Capacity Will Be