A firm adopting an aggressive working capital financing approach is more sensitive to unexpected changes in the term structure of interest rates than is a firm with a conservative financing policy.

Question

Quizplus · Accepted Answer

This is because an aggressive working capital financing approach typically involves more short-term borrowing, which means the firm would need to roll over or renew its loans more frequently. Any unexpected changes in the term structure of interest rates could therefore have a significant impact on the cost of borrowing for the firm.

A Firm Adopting an Aggressive Working Capital Financing Approach Is