Which of the Following Is More Likely for a Firm

question 72

Multiple Choice

Which of the following is more likely for a firm practicing the "relaxed" strategy of long- versus short-term borrowing at the height of sales demand?

• A) It will borrow heavily on a short-term basis.
• B) It will invest heavily in marketable securities.
• C) It will borrow heavily on a long-term basis.
• D) Long-term financing will approximate capital requirements.

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Definitions:

Consolidated Bonds Payable

The total amount of bonds owed by both a parent company and its subsidiaries as presented in consolidated financial statements.

Proposal

A plan or suggestion put forward for consideration or discussion, especially in a business or formal context.

Coattail Provision

A feature in shareholders' agreements that obliges minority shareholders to join in the sale of a company if the majority shareholders agree to sell their shares.

Restricted Shares

Shares of stock that are granted to an employee but come with restrictions on sale and transfer until certain conditions are met.