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I have got the capital rationing question in the exam in Section C, where I have to mention whether the company has been limited in spreading its investment in the number of projects as such. But I was stuck whether how do I elaborate the company data to tell whether it has been limiting in rationing or not.
Can you please explain to me how do I answer this handle of questions? I have seen your lecture on it but it was totally financial data was given that could be linked to tell whether it was rationing its investment or not BUT in exam it was totally seemed to be a theoretical question rather than financial.
I had this type of question in the exam which I sat for recently so I cannot really tell you the question’s name!
But can you please state that what should I suppose to say to this type of capital rationing which seems to be a theoretical question
If there is capital rationing then the question will make it clear that the capital is limited, but it all depends on the wording of the question.
Have you watched my free lectures on capital rationing? Also, there will be plenty of questions on capital rationing in your Revision Kit.
Yes, you are right that the question did mention that they have limited capital to invest and hardcopy & softcopy rationing which I had no idea what are these (before I watched your lecture) except that hardcopy limited rationing is used when there are external factors that are limiting the options to invest where softcopy rationing is where the company has put a limit to invest on itself. Am I correct?
Please advise what should I write for this question in the exam where I do not have to calculate anything but rather discuss. Please help me discuss this question.
I have both Kaplan & BPP kit but capital rationing is all about calculating rather than discussion in the KIT.
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