What Motivation Is Provided for Managers Not to Follow the Relaxed

question 39

Multiple Choice

What motivation is provided for managers not to follow the relaxed strategy of long- versus short-term financing?

• A) Transaction costs are required to continually obtain financing.
• B) Short-term investment income is often unattractive.
• C) Investment opportunities must frequently be ignored.
• D) Long-term financing has burdensome tax consequences.

---

Definitions:

Good

A tangible item or service that can be bought, sold, or traded.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive.

Tax

A necessary economic duty or another sort of imposition exacted from a taxpayer by a governmental agency to allocate funds for government activities and multiple public financial needs.

Good

A tangible item that satisfies some human want or need, which can be transferred from the producer to a buyer.