ACCA · Question 02 · Financial Management Environment
Section A
NeuroTech Prosthetics, a high-growth medical technology startup, is seeking additional venture capital funding. The central bank has recently announced a policy of aggressive quantitative tightening and consecutive interest rate hikes to combat inflation.
What is the most likely direct impact of these macroeconomic policies on NeuroTech Prosthetics?
Answer options:
A decrease in the cost of capital, making venture capital funding easier to secure.
An increase in the cost of capital and a decrease in the present value of future cash flows, lowering the company's valuation.
An immediate increase in short-term profitability due to higher interest income on cash reserves.
A reduction in systematic risk as inflation is brought under control.
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