Identify the correct statement.
A)It is absolutely compulsory for the government to earn a profitable return on the money it earns by selling bonds.
B)When government borrowing rises, interest rates decline, thereby driving up private investment.
C)When interest rates rise, fewer number of corporations offer new bonds to raise investment funds.
D)An increase in interest rate reduces the cost of borrowing by the firms.
E)When interest rates fall, the firm's cost of raising funds through bonds increases.

Question

Quizplus · Accepted Answer

When interest rates rise, the cost of borrowing increases, making it less attractive for corporations to issue new bonds to raise investment funds.

Identify the Correct Statement