A Firm with a Flexible Short-Term Financial Policy Will

question 46

Multiple Choice

A firm with a flexible short-term financial policy will:

• A) maintain a low balance in accounts receivables.
• B) only have minimal amounts, if any, invested in marketable securities.
• C) invest heavily in inventory.
• D) have low cash balances.
• E) have tight restrictions on granting credit to customers.

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Definitions:

Normal Curve

A symmetrical, bell-shaped curve that describes the distribution of many types of data where most of the observations cluster around the mean.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how much the values differ from the mean of the set.

Scatterplot

A graphed cluster of dots, each of which represents the values of two variables. The slope of the points suggests the direction of the relationship between the two variables. The amount of scatter suggests the strength of the correlation (little scatter indicates high correlation).

Normal Curve

A bell-shaped curve that represents the distribution of many types of data where most values are close to the mean.