Which One of the Following Statements About Working Capital Trade-Off

question 12

Multiple Choice

Which one of the following statements about working capital trade-off is NOT true?

• A) Financial managers need to balance shortage costs against carrying costs to find an optimal strategy.
• B) If carrying costs are smaller than shortage costs, then the company will maximise value by adopting a more restrictive strategy.
• C) If shortage costs dominate carrying costs, the company will need to move toward a more flexible policy.
• D) Management will try to find the level of current assets that minimises the sum of the carrying costs and shortage costs.

Gain knowledge about historical savings rates, particularly within the United States.

Learn the origins and meanings of key economic terms such as "conspicuous consumption."

Differentiate between induced consumption and other forms of consumption.

Comprehend how income levels affect consumption and savings, based on the consumption function.

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Definitions:

Discrete Random Variable

A variable that takes on a countable number of distinct values, often representing outcomes of a random process.

Expected Value

This is the mean of a random variable, representing the average outcome we would expect to see if we could repeat an experiment an infinite number of times.

Variance

A measure of the dispersion or spread of a set of data points, indicating how much the values differ from the mean of the set.

Random Variable

A variable whose numerical value results from a random experiment, characterized by its possible values and associated probabilities.