Which of the following statements is FALSE?

a.

A portion of a firm's investment in its accounts receivable and inventory is temporary and results from seasonal fluctuations in the firm's business or unanticipated shocks.

b.

In a perfect capital market, the choice of financing is irrelevant; thus how the firm chooses to finance its short-term cash needs cannot affect value.

c.

The matching principle indicates that the firm should finance permanent working capital with short-term sources of funds.

d.

Following the matching principle should, in the long run, help minimize a firm's transaction costs.

Which of the following statements is FALSE?

a.

A portion of a firm's investment in its accounts receivable and inventory is temporary and results from seasonal fluctuations in the firm's business or unanticipated shocks.

b.

In a perfect capital market, the choice of financing is irrelevant; thus how the firm chooses to finance its short-term cash needs cannot affect value.

c.

The matching principle indicates that the firm should finance permanent working capital with short-term sources of funds.

d.

Following the matching principle should, in the long run, help minimize a firm's transaction costs.