Which One of the Following Statements Is NOT True

question 10

Multiple Choice

Which one of the following statements is NOT true?

• A) Companies using matching maturity strategy fund all working capital needs with long-term borrowing.
• B) Long-term financing strategy relies on long-term debt to finance both capital assets and working capital.
• C) All working capital and a portion of fixed assets are funded with short-term debt when companies use the aggressive funding strategy.
• D) Companies using a matching maturity strategy fund all working capital needs with short-term borrowing.

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Definitions:

Construction Loans

Short-term loans provided to finance the building or renovation of a property, typically requiring interest-only payments during construction and full repayment upon completion.

Average Maturity

The weighted average of all the maturities of the bonds in a portfolio, reflecting the portfolio's sensitivity to interest rate changes.

Money Market Mutual Fund

A type of mutual fund investing in short-term debt securities, offering investors high liquidity with a relatively low level of risk.

Sales Load

A fee charged for the purchase or sale of shares in a mutual fund, often used to compensate brokers.