Clara is the finance manager at a mid-sized company. Although she knows that interest rates sometimes change in a favourable direction, she would prefer the stability of fixed interest payments over time. She should have a higher percentage of ____________ to finance her company's operations.

Question

Quizplus · Accepted Answer

Long-term funds provide stability over time, and therefore a higher percentage of long-term funds would allow for fixed interest payments and provide stability for the company's operations. Current liabilities and commercial paper require short-term payments, which would not provide the desired stability. Variable rate loans are subject to interest rate changes, which is not what Clara wants.

Clara Is the Finance Manager at a Mid-Sized Company