The Purpose of Managing Current Assets and Current Liabilities Is

question 118

Multiple Choice

The purpose of managing current assets and current liabilities is to

• A) achieve as low a level of current liabilities as possible.
• B) achieve as high a level of current liabilities as possible.
• C) achieve a balance between profitability and risk that contributes to the firm's value.
• D) achieve as low a level of current assets as possible.

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Definitions:

Long Straddle

A long straddle strategy involves simultaneously buying a put and call option on the same asset with the same strike price and expiration date, benefiting from a strong move in either direction.

Stock Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy a stock at a specified price within a certain period.

Call Premium

The amount by which the price of a callable bond exceeds its par (or nominal) value or the amount paid for an option above its intrinsic value.

Time Spread

An options or futures strategy where a trader simultaneously buys and sells the same financial instrument with different expiration dates.