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:

Sarbanes-Oxley Act

A U.S. law enacted in 2002 that aims to protect investors by making corporate disclosures more reliable and accurate.

Enron

A former American energy company known for its massive accounting fraud leading to its bankruptcy.

WorldCom

A major telecommunications company that was involved in a large-scale accounting scandal, leading to its bankruptcy in 2002.

Double Jeopardy

A legal principle that prevents an individual from being tried twice for the same offense in the same jurisdiction, as protected under the Fifth Amendment of the U.S. Constitution.