Which One of the Following Statements Is Correct

question 68

Multiple Choice

Which one of the following statements is correct?

• A)Seasonal needs are financed externally when firms adhere to a flexible financing policy.
• B)A flexible financing policy tends to increase the risk of encountering financial distress.
• C)Long-term interest rates tend to be less volatile than short-term rates.
• D)Most firms tend to finance inventory with long-term debt.
• E)Short-term interest rates are generally higher than long-term rates.

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Definitions:

Theoretically Correct

A term indicating that something is consistent with theory or established principles, often used in academic or scientific contexts.

Differences

The distinctions or variations between two or more entities or items, highlighting how they are not identical.

Short Position

The selling of a stock or other securities not owned by the seller, expecting the price will fall so it can be bought back at a lower price.

Contract Maturity

The specified date on a financial contract when the final payment is made or the contract comes to an end.