Question

The cost of capital: a. is the price of borrowing money, which is the rate of return that borrowers must pay investors. b. tends to be higher in an international capital market than it is in a purely domestic market. c. in a purely domestic market implies that borrowers must pay less to persuade investors to lend them their money. d. in an international market implies that borrowers wi

Answer 1

Answer:

The correct answer is option a.

Explanation:

The cost of capital is the price of borrowing capital. It is the rate of return that the borrowers have to pay. Or the investors get on their investment.

The cost of capital in a purely domestic market is higher than that in an international capital market. This is because easy availablity of capital in international market keeps the rates low.