Which of the Following Statements Is False

question 38

Multiple Choice

Which of the following statements is false?

• A) Financing part or all of the permanent working capital with short-term debt is known as an aggressive financing policy.
• B) When the yield curve is downward sloping, the interest rate on short-term debt is lower than the rate on long-term debt. In that case, short-term debt may appear cheaper than long-term debt.
• C) The value of short-term debt is less sensitive to the firm's credit quality than long-term debt; therefore, its value will be less affected by management's actions or information.
• D) Permanent working capital is the amount that a firm must keep invested in its short-term assets to support its continuing operations.

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Definitions:

Excess Capacity

The situation where a firm or economy can produce more goods or services than currently demanded, often leading to underutilization of resources.

Average Total Cost

The total cost of production divided by the total output, representing the cost per unit of production.

Advertising Slogan

A short and striking or memorable phrase used in advertising campaigns.

Potential Buyers

Individuals or entities that have shown interest or are in a position to purchase goods or services.