In economic conditions characterized by a scarcity of short-term funds, a firm would best choose the___________ financing strategy.
A) permanent
B) seasonal
C) aggressive
D) conservative

Question

In economic conditions characterized by a scarcity of short-term funds, a firm would best choose the___________  financing strategy.
A) permanent
B) seasonal
C) aggressive
D) conservative

Quizplus · Accepted Answer

In economic conditions characterized by a scarcity of short-term funds, a firm would best choose a conservative financing strategy. This means that the firm should prioritize long-term funding sources and maintain a high level of liquidity to ensure that it has enough cash on hand to meet its short-term obligations. This is particularly important in times of economic uncertainty when it may be difficult to access short-term funding sources or when interest rates are high. A conservative financing strategy can help a firm weather these challenges and ensure its long-term financial stability.

In Economic Conditions Characterized by a Scarcity of Short-Term Funds