The Optimal Investment in Current Assets for an Active Company

question 4

Multiple Choice

The optimal investment in current assets for an active company occurs at the point where:

• A) both shortage costs and carrying costs equal zero.
• B) shortage costs are equal to zero.
• C) carrying costs are equal to zero.
• D) carrying costs exceed shortage costs.
• E) shortage costs and carrying costs are equal.

---

Definitions:

Normative Pressure

The influence of societal norms and expectations on an individual's behavior.

Risky Shift

The phenomenon where groups tend to make riskier decisions compared to the decisions made by individuals.

Riskier Decisions

Refers to choices made under conditions of uncertainty that have a significant chance of leading to negative outcomes.

Group

A number of individuals or items that are considered or classed together because of common characteristics, attributes, or traits.