Which of the Following Companies Is Undercapitalized

question 54

Multiple Choice

Which of the following companies is undercapitalized?

• A) A large corporation that has been hit with a major lawsuit because one of its products has a design flaw that has led to serious injuries.
• B) A new company struggling because it has insufficient start-up funds.
• C) A medium-sized company that has decided to buy out a smaller competitor.
• D) An electric utility that has recently experienced a significant increase in the cost of coal and labor.

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Definitions:

First Bankers

Early financial intermediaries who accepted deposits, facilitated loans, and created ways to transfer wealth across great distances.

Goldsmiths

Historically, skilled artisans who made objects out of gold, but in economic context, also referred to as early bankers who issued loans and held deposits.

Barter Transactions

Economic exchanges where goods or services are directly swapped for other goods or services without the use of money as a medium of exchange.

Medium Of Exchange

An assisting mechanism utilized for the sale, acquisition, or exchange of commodities among different parties.