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Multiple Choice
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1

Working capital management involves the financing and management of the _______ assets of the firm.
A)fixed
B)total
C)current
D)none of the above
2

An asset sold at the end of a specified time period is called a _____________ asset.
A)temporary current
B)self-liquidating
C)current
D)permanent current
3

Fixed assets are usually financed with _____________ funds.
A)long-term
B)short-term
C)permanent
D)none of the above
4

______________ is usually used to finance self-liquidating assets.
A)Long-term financing
B)Short-term financing
C)Permanent financing
D)none of the above
5

Short-term interest rates, in a normal economy, are generally ________ than long-term rates.
A)higher
B)the same
C)lower
D)none of the above
6

The expectations hypothesis says that _________ interest rates are a function of _______ interest rates.
A)short-term; long-term
B)long-term; short-term
C)short-term; short-term
D)none of the above
7

Insurance companies would tend to invest in __________ securities.
A)short-term
B)intermediate term
C)long-term
D)not enough information to answer
8

The ______________ theory says that investors must be paid a premium to hold long-term securities.
A)expectations hypothesis
B)time value theory
C)segmentation
D)liquidity premium
9

Short-term financing plans with high liquidity have:
A)high return and high risk
B)moderate return and moderate risk
C)low profit and low risk
D)none of the above
10

Long-term financing plans with low liquidity have:
A)high return and high risk
B)moderate return and moderate risk
C)low return and low risk
D)none of the above





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