The Lower the Level of Current Assets That Is Required

question 40

Multiple Choice

The lower the level of current assets that is required to support its operations, the more closely a firm can adhere to a _____ current asset investment policy. 

• A)relaxed
• B)restricted
• C)moderate
• D)lean-and-mean
• E)precautionary

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Definitions:

Compounded Semi-Annually

Interest on an investment is calculated and added to the principal every six months, with future interest then calculated on the new total.

Fair Market Value

The price at which an asset would change hands between a willing buyer and a willing seller, both having reasonable knowledge of all the relevant facts.

Provincial Bonds

Provincial bonds are debt securities issued by a provincial government in Canada to finance its expenditures and obligations.

Ordinary Annuity

A series of equal payments made at equal intervals of time, such as monthly or annually.