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Hi, sir
I have trouble understanding the example ” soft capital …for example, the amount of funds needed may be small in relation to the costs of raising the finance.”There is not much point in borrowing (say) $1,000 if the charges involved in raising the money are $800 – you would be left with hardly anything.
If you were borrowing $10,000 than it might be worth paying charges of $800 🙂However, wherever you read this, it is not a very good explanation of soft capital rationing at all. For a better explanation you need to watch my free lecture on capital rationing.
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