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:

Cone of Depression

A cone-shaped lowering of the water table around a pumping well, due to the removal of groundwater faster than it can be replenished.

Overpumped

A term usually related to groundwater resources, indicating a condition where water is removed from an aquifer at a rate faster than it can be replenished.

Aquifer

An underground layer of water-bearing permeable rock, rock fractures, or unconsolidated materials (gravel, sand, silt) from which groundwater can be extracted.

Karst Topography

A landscape formed from the dissolution of soluble rocks such as limestone, characterized by sinkholes, caves, and underground streams.