Which of the Following Statements Is FALSE

question 39

Multiple Choice

Which of the following statements is FALSE?

• A)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:

Sample

Group of subjects selected from a larger population of subjects, usually selected randomly.

Population

In statistics and research, the entire group of individuals or instances about whom the information is desired; in biology, all the organisms of the same group or species living in a particular geographic area.

Correlational Method

A research strategy that involves measuring two or more variables to determine the degree of relationship between them.

Variables

Elements, features, or factors that are liable to vary or change within a study, experiment, or any form of research.