Which of the Following Is an Advantage of Using Credit

question 29

Multiple Choice

Which of the following is an advantage of using credit?

• A)It increases the need to cover cash flow shortages.
• B)It increases the number of cheques written.
• C)It does not affect your cash flow statement.
• D)It reduces the need to carry cash.

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Definitions:

Informationally Efficient

A characteristic of markets where all available information is already reflected in the prices of assets, ensuring that no participant can achieve consistent excess returns.

Fundamental Analysis

A method of evaluating a security by attempting to measure its intrinsic value, involving examination of related economic and financial factors.

Moral Hazard

The situation in which one party is more likely to take risks because another party bears the cost of those risks.

Active Portfolio Managers

Investment professionals who actively make decisions to buy, sell, or hold assets in order to beat the market average or achieve specific investment objectives.