What Motivation Is Provided for Managers Not to Follow the Relaxed

question 112

Multiple Choice

What motivation is provided for managers not to follow the relaxed strategy of long- versus short-term financing?

• A)transaction costs are required to continually obtain financing
• B)short-term investment income is often unattractive
• C)investment opportunities must frequently be ignored
• D)long-term financing has burdensome tax consequences

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Definitions:

Negotiable Instrument

A written assurance for the remittance of a fixed sum of money, payable either on demand or at a future date, with the document clearly stating the name of the individual making the payment.

Liability

A legal responsibility or obligation.

Entitlement To Payment

The legal right or claim to receive a specific sum of money.

Dishonor

In legal and financial contexts, dishonor refers to the failure to fulfill an obligation, such as when a check is not honored by a bank due to insufficient funds.