Which of the Following Statements Is False

question 18

Multiple Choice

Which of the following statements is false?

• A) On the other hand, by relying on short-term debt the firm exposes itself to funding risk, which is the risk of incurring financial distress costs should the firm not be able to refinance its debt in a timely manner or at a reasonable rate.
• B) An ultra-conservative policy would involve financing even some of the plant, property, and equipment with short-term sources of funds.
• C) With a conservative financing policy, the firm would use short-term debt very sparingly to meet its peak seasonal needs.
• D) Short-term debt can have lower agency and lemons costs than long-term debt, and an aggressive financing policy can benefit shareholders.

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Definitions:

Confidence Interval

A confidence interval provides a range of values, estimated from sample data, that is likely to contain the value of an unknown population parameter, along with a specified level of confidence.

Standard Deviation

An indication of how much the values in a dataset spread out or diverge from one another.

Mean Grams of Fat

The average amount of fat, measured in grams, consumed or contained in a particular diet or food item.

Confidence Interval

A range of values calculated from a set of data so that it is very likely, to a specified probability, that the true parameter of the population is within this range.