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    Question

    Which financing strategy balances liquidity risk and

    cost by matching short-term needs with short-term funds and permanent working capital with long-term funds?
    A Conservative approach Correct Answer Incorrect Answer
    B Aggressive approach Correct Answer Incorrect Answer
    C Matching or hedging approach Correct Answer Incorrect Answer
    D Highly leveraged approach Correct Answer Incorrect Answer
    E Hybrid approach Correct Answer Incorrect Answer

    Solution

    The matching/hedging approach finances temporary current assets with short-term funds and permanent current assets with long-term sources, balancing risk and return.

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