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Soft and hard capital rationing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Soft and hard capital rationing

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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    Posts
  • April 4, 2018 at 5:22 pm #445012
    humai
    Participant
    • Topics: 757
    • Replies: 248
    • ☆☆☆☆☆

    Sir there is a past exam question for 5 marks that discuss the reasons why investment finance may be limited even when a company has attractive investment opportunities available to it?

    Sir will writing the below answer will be sufficient or will we have to explain further?

    Theoretically a company should invest in all projects with a positive NPV in order to maximize shareholder wealth. If investment finance is limited for reasons outside a company it is called hard capital rationing.If investment finance is limited for reasons within a company it is called soft capital rationing.

    April 4, 2018 at 7:44 pm #445028
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54728
    • ☆☆☆☆☆

    No – that is not enough for 5 marks. You need to explain hard and soft rationing a bit more.

    Read what the examiners answer to this question says and check how the marks are allocated in the marking scheme.

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Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Soft and hard capital rationing’ is closed to new replies.

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