If the Total Long Term Financing of the Firm Is

question 44

Multiple Choice

If the total long term financing of the firm is greater than the total financing needs for part of the year, and less than the needs for some of the year due to seasonal fluctuations, the company will most likely:

• A)hold excess cash.
• B)borrow short term and hold excess cash.
• C)hold excess cash and reduce business activities.
• D)invest in marketable securities and borrow short term.
• E)None of the above.

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Definitions:

Favorable Supply Shock

An unexpected event that increases the supply of goods or services, typically leading to lower prices for those goods or services.

Short-run Phillips Curve

A concept in economics that illustrates an inverse relationship between inflation and unemployment within a certain period, implying that lower unemployment in the short run can come with higher levels of inflation.

Central Bank

An institution that manages a country's currency, money supply, and interest rates, overseeing the commercial banking system.

Inflation Rate

The rise in the average price levels of goods and services within an economy over a given time frame.