More Realistically, the Liquidity Function Is Not ______ but A(n)

question 135

Multiple Choice

More realistically, the liquidity function is not ______ but a(n) ______ function of the demand for real balances based on changes in the ______.

• A) constant; decreasing; nominal rate of interest
• B) increasing; constant; real rate of interest
• C) decreasing; increasing; level of real income
• D) constant; increasing; real rate of interest

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Definitions:

AFN

Additional Funds Needed; the extra funding required by a firm to support its operations and growth.

Additional Funds Needed (AFN)

The projected amount of new external funding required by a firm to support its business expansion and meet its capital requirements.

Target Payout Ratio

Percentage of net income paid as a cash dividend.

Constant Ratio

A financial strategy or policy that maintains a fixed proportionate relationship between two or more variables, such as assets and liabilities.