A flExible Short-Term fiNancial Policy

question 79

Multiple Choice

A flexible short-term financial policy:

• A)increases the likelihood that a firm will face financial distress.
• B)incurs an opportunity cost due to the rate of return that applies to short-term assets.
• C)advocates a smaller investment in net working capital than a restrictive policy does.
• D)increases the probability that a firm will earn high returns on all of its assets.
• E)utilizes short-term financing to fund all of the firm's assets.

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Definitions:

Collaborative Partnerships

Cooperative relationships between individuals or organizations aimed at achieving shared goals through working together.

Component

A part or element of a larger whole, especially part of a machine or system.

Trust

The firm belief in the reliability, truth, ability, or strength of someone or something.

Policies

A course or principle of action adopted or proposed by an organization or individual.