Which One of the Following Statements Is Correct

question 88

Multiple Choice

Which one of the following statements is correct?

• A)Firms should generally finance all of their assets with long-term debt.
• B)Firms that follow restrictive financial policies can generally avoid short-term debt financing.
• C)Short-term borrowing is generally more expensive than long-term borrowing.
• D)Long-term interest rates tend to be more volatile than short-term rates.
• E)A firm is less apt to face financial distress if it adopts a flexible financial policy rather than a restrictive policy.

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Definitions:

Utilitarian Justice

The idea that “a dollar in the hand of a rich person is worth less than a dollar in the hand of a poor person.” If the marginal utility of income declines with income, transferring income from the rich to the poor will increase total utility.

Human Capital

The economic value of a worker's experience and skills, including education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.

Utilitarian Justice

A principle in ethics and economics that a decision should be made so as to maximize overall happiness and reduce suffering among all people affected by the decision.

John Stuart Mill

A British philosopher and economist, known for his contributions to liberalism, utilitarianism, and political economy.