In General, the More Net Working Capital a Firm Has

question 241

Multiple Choice

In general, the more net working capital a firm has, ________.

• A) the greater its risk
• B) the lower its risk
• C) the less likely are creditors to lend to the firm
• D) the lower its level of long-term funds

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Definitions:

Senior Debt

Debt that has priority over other unsecured or otherwise more junior debt owed by the issuer in the case of bankruptcy.

Debentures

A type of long-term debt instrument that is not secured by physical assets or collateral.

Callable Unsecured Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified call price and are not secured by collateral.

Subordinated Debentures

Bonds that have a lower priority than other debt obligations in case of liquidation, often carrying higher risk and yield.