Which One of These Is Most Associated with a Disadvantage

question 56

Multiple Choice

Which one of these is most associated with a disadvantage of the relaxed strategy of long- versus short-term financing?

• A) Transaction costs are required to continually obtain financing.
• B) Short-term investment income is often unattractive.
• C) Investment opportunities must frequently be ignored.
• D) Long-term financing has burdensome tax consequences.

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Definitions:

Intragroup Sale

Sales transactions that occur between entities within the same group or parent company, often used in the context of transfer pricing and consolidation adjustments.

Consolidation

The process of combining the financial statements of two or more entities into one, typically within a group controlled by a parent company.

Unrealised Gains

Profits that have been made but not yet realized through a transaction, such as an increase in the value of an investment that has not been sold.

Intragroup Sales

Transactions where goods or services are exchanged between entities within the same group.