An Aggressive Method of Financing an Ongoing Construction Program Would

question 26

True/False

An aggressive method of financing an ongoing construction program would be for a company to sell bonds and equity before it actually needs funds,and to invest the proceeds in marketable securities until they are actually needed.

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Definitions:

Required Reserve Ratio

The fraction of deposits that banks are required to hold in reserve, either in their vaults or with the central bank, not to be used for loans.

Excess Reserves

The excess funds that a bank or financial institution maintains beyond the minimum mandated by regulatory bodies, creditors, or its own internal policies.

Money Supply

The total amount of money—cash, coins, and balances in bank accounts—in circulation within a country's economy at a specific time.

Required Reserve Ratio

The fraction of deposits that banks are required to keep on hand and not lend out, as set by the central bank.