Question
Which of the following statements is true? I) Because temporary working capital represents a short-term need, the matching principle recommends this firm should finance this
Which of the following statements is true?
I) Because temporary working capital represents a short-term need, the matching principle recommends this firm should finance this portion of its investment with short-term financing.
II) Because investment in permanent working capital is required so long as the firm remains in business, it constitutes a long-term investment, and the matching principle suggests it should be financed by long-term capital sources.
III) In financial markets only long-term debt can be secured by collateral. Short-term debt is always unsecured.
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