Which of the Following Statements Is FALSE

question 33

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:

Donee Beneficiary

A third party who benefits from a contract in which a promisor agrees to give a gift to the third party.

Incidental Beneficiary

A third party who may benefit from a contract between two other parties, even though the benefit was not the purpose of the contract.

Civil Code

A systematic collection of laws designed to comprehensively deal with the core areas of private law such as property, family, and contracts.

Uniform Commercial Code

An extensive collection of regulations overseeing every commercial activity within the United States.