Chapter 6 Flashcards
1
Q
working capital management
A
financing and management of the current assets
2
Q
controlling assets
A
matching sales and production
3
Q
long term financing
A
finance of:
- fixed assets
- permanent current assets
- part of temporary assets
4
Q
short term financing
A
finance of:
1. temporary current assets
2. permanent working capital needs
(positive=lower interest rates)
5
Q
Liquidity Premium theory
A
long term rates should be higher than short term rate
6
Q
Market segmentation theory
A
most investors have set preferences regarding the length of maturities that they will invest in
7
Q
risk-oriented firm
A
short-term borrowings and low degree of liquidity
8
Q
conservative firm
A
long-term financing and high degree of liquidity
