GENERAL KNOWLEDGE

Detailed explanation-1: -Hard capital rationing. Hard capital rationing represents rationing that is being imposed on a company by circumstances beyond its control. Soft capital rationing. 12-Dec-2022

Detailed explanation-2: -There are two primary types of capital rationing, referred to as hard and soft: Hard capital rationing occurs based on external factors. For example, the company may be finding it difficult to raise additional capital, either through equity or debt. Or, its lenders may impose rules on how it can use its capital.

Detailed explanation-3: -The government can pursue two main types of rationing in economics to tackle crises: non-price rationing and price rationing.

Detailed explanation-4: -Capital rationing is defined as the process of placing a limit on the extent of new projects or investments that a company decides to undertake. This is made possible by placing a much higher cost of capital for the consideration of the investments or by placing a ceiling on a particular proportion of a budget.

Detailed explanation-5: -Soft rationing occurs when capital is restricted based on internal policies and limitations. An example of this would be if a company’s management decided to only invest in projects with returns that exceed the required rate of return by a certain percentage.