Which One of the Following Can a Firm Do If

question 28

Multiple Choice

Which one of the following can a firm do if it effectively manages its financial risks?

• A)eliminate all the risks faced by the firm
• B)totally eliminate all financial risks
• C)reduce the price volatility it faces
• D)guarantee the firm's financial success
• E)avoid all long-term financial risks

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Definitions:

Float

Money tied up in the check-clearing process.

Check Clearing

Check clearing is the process through which banks verify and process the transfer of funds from the check issuer's account to the recipient's account, finalizing the transaction.

Transit Float

The time difference between when a payment is made and when it is available in the recipient's account.

Processing Float

The time delay between when a check is written and when it is actually deducted from the payer's account, often utilized in managing company cash flows.