Which of the Following Statements Is False

question 3

Multiple Choice

Which of the following statements is false?

• A) The matching principle indicates that the firm should finance permanent working capital with short-term sources of funds.
• B) Following the matching principle should, in the long run, help minimize a firm's transaction costs.
• C) In a perfect capital market, the choice of financing is irrelevant; thus how the firm chooses to finance its short-term cash needs cannot affect value.
• D) A portion of a firm's investment in its accounts receivable and inventory is temporary and results from seasonal fluctuations in the firm's business or unanticipated shocks.

Understand the impact of positive illusion bias on team operations and individual contributions.

Describe the components critical to team design and the organizational support for teams.

Distinguish between conditions that can improve or impair individual and team performance under stress.

Know the elements that comprise the team performance equation and how actual productivity is determined.

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Definitions:

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, which is considered when financing its overall operations and growth.

Economic Expansion

A phase of the business cycle where economic activity is increasing, characterized by higher production, employment, and income.

Outstanding Shares

The total number of shares of stock that are currently owned by all shareholders of a company, including shares held by institutional investors and restricted shares.

Cost of Debt

The effective rate that a company pays on its current debt, including loans and bonds.