Question

7. Critical Analysis Q13 Suppose the normal return on financial capital is 10%. Which of the following statements best describes investor behavior? Investors will continue to supply equity capital to a firm if they earn a 10% (or greater) return on their equity capital. Investors will continue to supply equity capital to a firm if they earn a 9% return on their equity capital. Investors will continue to supply equity capital to a firm if they earn an 8% return on their equity capital. Investors will continue to supply equity capital to a firm if they earn a 7% return on their equity capital.

          7. Critical Analysis Q13
Suppose the normal return on financial capital is 10%.
Which of the following statements best describes investor behavior?

	Investors will continue to supply equity capital to a firm if they earn a 10% (or greater) return on their equity capital.
	Investors will continue to supply equity capital to a firm if they earn a 9% return on their equity capital.
	Investors will continue to supply equity capital to a firm if they earn an 8% return on their equity capital.
	Investors will continue to supply equity capital to a firm if they earn a 7% return on their equity capital.

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