Which of the Following Statements Is Not True

question 42

Multiple Choice

Which of the following statements is not true?

• A) A flexible policy toward total asset requirement involves cash surplus.
• B) A flexible policy toward total asset requirement involves a permanent need for short-term borrowing.
• C) A restrictive policy toward total asset requirement involves a large investment in net working capital.
• D) Maturity hedging seeks to avoid financing long-term assets with short-term borrowing.
• E) Usually, long-term borrowing costs are lower than short-term borrowing costs.

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Definitions:

World Price

The international market price of a product or commodity, influenced by global supply and demand conditions.

Free Trade

An economic policy that allows imports and exports between countries with minimal or no barriers to trade, such as tariffs or quotas, encouraging international commerce.

Imported

Brought into a country from abroad for the purpose of selling.

Net Welfare Loss

Describes the reduction in social welfare, often resulting from inefficiencies such as taxes, subsidies, tariffs, or monopolies, which distort market equilibrium.