The principle of "matched maturities" in finance refers to:

Question

Quizplus · Accepted Answer

Matched maturities refers to funding long-term assets with long-term sources of funds, and short-term assets with short-term sources of funds. This helps to minimize the risk of liquidity issues and ensures that the company has the necessary funds to cover its obligations at all times. Option A is incorrect as it suggests finding sources of funds with the longest maturity, which may not be the best approach in all cases. Option C is incorrect as it is not always advisable to use short-term financing due to the higher risk and uncertainty associated with short-term debt. Option D is also incorrect as it does not relate to the concept of matched maturities.

The Principle of "Matched Maturities" in Finance Refers To