The Practice of Borrowing Short and Lending Long

question 346

Multiple Choice

The practice of borrowing short and lending long

• A) pools risk.
• B) minimizes the cost of monitoring borrowers.
• C) creates liquidity.
• D) All of the above answers are correct.

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Definitions:

Net Income

A company's total earnings or profit, calculated as revenue minus expenses, taxes, and costs.

FOB Destination

A shipping term indicating that the seller is responsible for the goods until they are delivered to the buyer's specified location, whereupon title and risk of loss pass to the buyer.

Revenue Recognition

The accounting principle dictating the specific conditions under which revenue is recognized or recorded.

Shipment Date

The shipment date is the day on which goods are officially transferred from the seller to the carrier or dispatched for delivery to the buyer.