The Move from an Aggressive Financing Strategy to a Moderate

question 1

Multiple Choice

The move from an aggressive financing strategy to a moderate financing strategy should __________ a company's liquidity by increasing the use of ________-term funds.

• A)Increase,long
• B)Increase,short
• C)Decrease,long
• D)Decrease,short

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Definitions:

Bond Payable

A long-term liability account that records the amounts owed to bondholders by the issuer.

Straight-Line Method

A technique for determining depreciation or amortization that involves uniformly distributing the cost of an asset throughout its lifespan.

Contract Rate

A contract rate is a pre-agreed price or fee set in a contract for services or goods, which remains fixed for the duration of the agreement.

Market Rate

The prevailing price or interest rate at which goods, services, or securities are traded in the open market.