Which of the Following Statements Is FALSE

question 39

Multiple Choice

Which of the following statements is FALSE?

• A)By relying on short-term debt the firm exposes itself to funding risk,which is the risk of incurring financial distress costs should the firm not be able to refinance its debt in a timely manner or at a reasonable rate.
• B)An ultra-conservative policy would involve financing even some of the plant,property,and equipment with short-term sources of funds.
• C)With a conservative financing policy,the firm would use short-term debt very sparingly to meet its peak seasonal needs.
• D)Short-term debt can have lower agency and "lemons" costs than long-term debt,and an aggressive financing policy can benefit shareholders.

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Definitions:

Disorganized Thinking

A state where an individual has trouble organizing their thoughts, often leading to difficulties communicating or making decisions.

Prefrontal Cortex

The part of the brain located at the front of the frontal lobes, instrumental in planning complex cognitive behaviors, personality expression, decision making, and moderating social behavior.

Monoamine Oxidase Inhibitors (MAOIs)

A class of antidepressant drugs that work by inhibiting the activity of monoamine oxidase, thereby increasing the levels of certain neurotransmitters in the brain.

Neurotransmitter Reuptake

The process by which neurotransmitters are reabsorbed by the nerve cell that released them, helping to terminate the signal between neurons.