When Managers Are Continually Short-Term Lenders,they Are Said to Follow

question 28

Multiple Choice

When managers are continually short-term lenders,they are said to follow a:

• A) middle-of-the-road financing strategy.
• B) restrictive financing strategy.
• C) relaxed financing strategy.
• D) permanent working-capital strategy.

---

Definitions:

Transaction Costs

The costs that parties incur during the process of agreeing to and following through on a bargain.

Mutually Beneficial Agreement

An arrangement between parties where both or all receive benefits or advantages.

Coase Theorem

A legal and economic theory that states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property.

Taxes

Compulsory financial charges or levies collected by governments from businesses and individuals to fund public expenditures.