ACCA · Question 02 · Financial Management Environment
Section A
QuantumTech is a highly geared software startup. The central bank of the country where QuantumTech operates has recently announced a policy of quantitative tightening and significant increases in the base interest rate to combat inflation.
What is the most likely immediate impact of this macroeconomic policy on QuantumTech?
Answer options:
A decrease in the cost of equity due to lower inflation expectations.
An increase in the cost of debt and a decrease in interest cover.
An improvement in cash flow due to higher returns on cash deposits.
A reduction in the company's weighted average cost of capital (WACC).
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