The Conservative Financing Strategy

question 7

Multiple Choice

The conservative financing strategy:

• A)Is basically a maturity matching strategy
• B)Uses only long-term funds
• C)Uses only short-term funds
• D)Uses a mix of short-term and long-term funds

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Definitions:

Capital Gains

The profit realized from the sale of assets or investments when the selling price exceeds the original purchase price.

Market Interest Rates

The prevailing rates at which borrowers can obtain loans and lenders can deposit funds in the financial markets, influenced by supply and demand, inflation, and monetary policy.

Bond's Price

The current market value of a bond, which can fluctuate based on interest rate movements and the bond's credit quality.

Present Value

The immediate financial value of a future cash sum or succession of cash inflows, evaluated with a specified return rate.