Which of the Following Is Not a Condition Under Which

question 67

Multiple Choice

Which of the following is not a condition under which a prudent manager would accept some risk in financing?

• A)Predictable cash-flow patterns
• B)Inventory is highly perishable.
• C)The price of inventory is stable.
• D)Basic access to capital markets

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Definitions:

Forward Contract

is a non-standardized contract between two parties to buy or sell an asset at a specified future date for a price agreed upon today.

Settlement Date

The date on which a trade is finalized, and the buyer must make payment and the seller must deliver the asset.

Option Contract

A financial contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a certain period.

Right

In finance, the prerogative to buy or sell a security under specific conditions, often associated with options.