CUET Preparation Today
A firm's ability to borrow at a lower rate |
Decreases its capacity to employ higher debt Increases its capacity to employ higher debt Can or employ any amount of debt available from market Unable to raise any amount of debt |
Increases its capacity to employ higher debt |
The correct answer is option 2- Increases its capacity to employ higher debt. A firm's ability to borrow at a lower rate improves its capacity to take on higher levels of debt. This is because lower borrowing costs reduce the financial burden of debt, making it easier for the firm to manage additional debt. As a result, the company can afford to take on more debt while still maintaining financial stability. |
