The cost of capital is determined by

Question

Quizplus · Accepted Answer

The cost of capital, which is the return required by investors for their investment, is determined by the capital market, which is where companies and governments issue securities and investors buy and sell them. This cost of capital is influenced by various factors such as interest rates, inflation, demand and supply of funds, and market conditions. Bankers may play a role in setting the cost of loans, but they do not determine the overall cost of capital. The federal budget deficit and foreign exchange market may affect the broader economic conditions, but they do not directly determine the cost of capital.

The Cost of Capital Is Determined by