When a Firm Finances Long-Term Assets with Short-Term Sources of Funding

question 47

Multiple Choice

When a firm finances long-term assets with short-term sources of funding, it:

• A)reduces the risk of cash shortage
• B)will have lower interest expense
• C)improves the leverage ratio
• D)is ignoring the principle of matched maturities

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Definitions:

Santa Costanza

An ancient church in Rome, Italy, notable for its central plan and early Christian art, dating back to the 4th century.

Roman Funerary Art

Art forms from ancient Rome designed to commemorate the deceased, including sculptures, monuments, and tomb paintings.

Greek Mythology

A body of myths belonging to the ancient Greeks, concerning their gods and heroes, the nature of the world, and the origins and significance of their own cult and ritual practices.

Illustrated Vergil

Manuscripts or books containing visual depictions related to the works of Vergil, the ancient Roman poet famed for his epic, the Aeneid.