What Is Permanent Working Capital

question 58

Multiple Choice

What is permanent working capital?

• A)the amount that a firm must keep invested in its short-term assets to support its continuing operations
• B)the difference between the actual level of investment in short-term assets and the amount that a firm must keep invested in its short-term assets to support its continuing operations
• C)the amount that a firm keeps invested in its short-term assets to support its continuing operations which is financed by short-term debt
• D)the amount that a firm keeps invested in its short-term assets to support its continuing operations which is financed by long-term debt
• E)the amount that a firm keeps invested in its short-term assets which is financed by debt

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Definitions:

Average Stock

The average price of a company's stock over a specific period, which can indicate the stock's general trend.

Diversified Portfolio

An investment portfolio that contains a mix of assets (e.g., stocks, bonds, real estate) to reduce risk through diversification.

Market Portfolio

A portfolio consisting of all stocks.

Correlation

A statistical measure that describes the extent to which two variables change together, and thus how well one variable can predict the other.