A firm will have difficulty attracting investors if investments in the firm have internal rates of return below an investor's required rate of return.

Question

Quizplus · Accepted Answer

This is because investors seek to maximize their returns and will not invest in a firm if their required rate of return (which is based on factors such as the level of risk associated with the investment) cannot be met by the firm's potential returns.

A Firm Will Have Difficulty Attracting Investors If Investments in the Firm