Why Will Banks Permit the Use of an Overdraft as Suitable

question 33

Multiple Choice

Why will banks permit the use of an overdraft as suitable for funding the purchase of inventory that will quickly be converted into cash?

• A)To assist a company in meeting unexpected short-term cash flow problems.
• B)To assist a company in exploiting short-term opportunities.
• C)To assist a company through seasonal downturns in liquidity.
• D)All of the given options.

---

Definitions:

Condorcet Paradox

A scenario in social choice theory where collective preferences can be cyclical, even if the preferences of individual voters are not, leading to the absence of a clear majority opinion.

Transitive Preferences

In decision theory, a preference system where if an individual prefers option A to B and B to C, then they also prefer A to C.

Condorcet Paradox

A situation in majority voting where collective preferences can be cyclical and inconsistent, despite the individual preferences being rational and transitive.

Preferred Spending

the allocation of financial resources towards goods, services, or investments that are most favored or prioritized by an individual or entity.