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:

Cash Dividend

A payment made by a corporation to its shareholders, usually in the form of cash.

Net Cash

The amount of cash that remains after accounting for all cash inflows and outflows during a specified period.

Operating Activities

Activities that are directly related to the primary business operations, such as selling products or services and associated costs.

Net Income

The overall income a business makes once all costs, such as taxes and operational expenditures, are deducted from the total earnings.