Which of the Following Statements Regarding How a Firm Should

question 5

Multiple Choice

Which of the following statements regarding how a firm should finance its cash needs is true?

• A) Permanent working capital should be financed by long-term sources of funds, while temporary working capital should be financed by short-term sources of funds.
• B) Permanent working capital should be financed by short-term sources of funds, while temporary working capital should be financed by long-term sources of funds.
• C) Both permanent working capital and temporary working capital should be financed by short-term sources of funds.
• D) Both permanent working capital and temporary working capital should be financed by long-term sources of funds.
• E) Permanent working capital should be financed by long-term sources of funds, while temporary working capital should only be paid for with cash.

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Definitions:

Psychology

The scientific study of the human mind and its functions, especially those affecting behavior.

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Operant Conditioning

A training approach that modifies the strength of a behavior through the application of reinforcement or punishment.

Classical Conditioning

An educational method happening via linking an external stimulus with a naturally happening one.