Answer to Question #253468 in Financial Math for Millicent

Question

Investment decisions cannot be affected by

Select one:

a. Expected rate of return

b. Cost of capital goods

c. Interest rate

d. None of the options are correct

Answer 1

There are several factors that effect the investment decision of the investor they are:

1. Expected Rate of Return shows the amount of return that can be earned by the investor after a subsequent time period. It is a vita part of investment, as every investor look for the amount that investment is going to generate in near future.

2. Interest rate also affect investment decision as, it bear negative relationship with investment. Higher the interest rate offered by bank lower will be the rate of investment and vice-versa. 

3.Cost of capital goods: if a investor is investing his/her money on purchasing the capital good that will definitely going to effect the decision of investor, as the value of capital good in coming future will also be calculated by the investor.

Thus, option D is the correct alternative.