4- Which of the following statements are correct concerning a restrictive short-term financial policy?

I. A restrictive policy is most appropriate when carrying costs are low relative to shortage costs.

II. A restrictive policy is most appropriate when carrying costs are high relative to shortage costs.

III. A restrictive policy requires more short-term debt than does a flexible policy.

IV. The optimal current asset holdings are lower under a restrictive policy than under a flexible policy.

A) I and III only

B) I and IV only

C) II and III only

D) II and IV only

E) II, III, and IV only