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Asset Liquidity Financing Plan Low Liquidity High Liquidity Short Term 1 High Profit High Risk Long Term 4 Low Profit Low Risk Why is Box

Asset Liquidity

Financing Plan

Low Liquidity

High Liquidity

Short Term

1

High Profit

High Risk

Long Term

4

Low Profit

Low Risk

Why is Box #4 considered Low Profit?

A.

Because, normally, long term interests rates are higher than short term interest rates.

B.

Because, normally, long term interest rates are lower than short term interest rates.

C.

Because, normally, long term and short term interest rates are the same.

D.

None of the above.

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