The volatility of interest rates affect the value of the project by:
A) increasing the value as volatility increase.
B) increasing the value as volatility decrease.
C) decreasing the value as volatility increase.
D) Interest rate volatility does not affect value.

Question

Quizplus · Accepted Answer

Interest rate volatility can increase the value of a project because it introduces the possibility of refinancing at more favorable rates or benefiting from lower interest costs in the future, thus potentially enhancing the project's value.

The Volatility of Interest Rates Affect the Value of the Project