The Practice of Borrowing Short and Lending Long

question 134

Multiple Choice

The practice of borrowing short and lending long

• A) creates liquidity.
• B) pools risk.
• C) minimizes the cost of monitoring borrowers.
• D) All of the above answers are correct.

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Definitions:

Inventory Turnover

A metric indicating the frequency at which a company's inventory is sold and replenished within a specific timeframe.

Dividend Yield

A metric showing the yearly dividend payouts of a company as a proportion of its stock price.

Gross Margin Ratio

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold; used to assess a company's financial health.

Return on Common Stockholders' Equity

A financial ratio that measures the profitability generated from the common stockholders' equity investment, indicating how efficiently equity capital is being utilized.