Which of the Following Combinations of Asset Structures and Financing

question 28

Multiple Choice

Which of the following combinations of asset structures and financing patterns is likely to create the least volatile earnings?

• A) Illiquid assets and heavy short-term borrowing
• B) Illiquid assets and heavy long-term borrowing
• C) Liquid assets and heavy long-term borrowing
• D) Liquid assets and no debt

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Definitions:

Majority rule

A decision-making process where the option that receives more than half of the votes wins.

Arrow's Impossibility Theorem

A theory stating that no rank-order voting system can meet a set of reasonable fairness criteria simultaneously.

Difficulties

Challenges or situations that require effort to overcome.

Borda Count

A voting method that ranks options or candidates based on points assigned by voters' preferences rather than a single preference vote.