The appropriate amount of short-term borrowing is determined by:
A) cash reserves.
B) maturity hedging.
C) relative interest rates.
D) All of these.
E) None of these.

Question

Quizplus · Accepted Answer

The appropriate amount of short-term borrowing is determined by all three factors: cash reserves, maturity hedging, and relative interest rates. Cash reserves help determine how much a company can afford to borrow without causing financial distress. Maturity hedging considers the length of time the funds will be needed and matches the financing to that timeframe. Relative interest rates also play a role in determining the cost and availability of short-term borrowing options. Therefore, option D is the correct choice as all three factors are important in determining the appropriate amount of short-term borrowing.

The Appropriate Amount of Short-Term Borrowing Is Determined By