The Principle of "Matched Maturities" in Finance Refers To

question 7

Multiple Choice

The principle of "matched maturities" in finance refers to:

• A)Finding sources of funds with the longest maturity, in order to avoid liquidity crises
• B)Funding long-term assets with long-term sources, and vice versa
• C)Using as much short-term financing as possible due to the lower cost of interest
• D)Buying marketable securities when demand is high and borrowing short term when demand is low

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Definitions:

Marginal Cost

Marginal cost is the additional cost incurred from producing one more unit of a good or service.

Producing Bagels

The process of making bagels, which involves mixing, shaping, boiling and then baking dough, typically in a commercial or artisanal bakery setting.

Total Cost

The complete cost of producing a specific quantity of goods or services, including fixed and variable costs.

Average Fixed Cost

Production's unchanging overheads split by the volume of goods produced.