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:

Sovereignty

The full right and power of a governing body to govern itself without any interference from outside sources or bodies.

Grievances

Complaints or protests, often against injustices or perceived wrongs, that can lead to demands for change or redress.

Standard Error

The standard deviation of the sampling distribution of a statistic, often used to measure the accuracy of a sample mean.

Standard Deviation

A measure of the dispersion or variability of a dataset, representing the average distance between each data point and the mean.