The maturity matching,or "self-liquidating," approach involves the financing of permanent net operating working capital with combinations of long-term capital and short-term capital that vary depending on the level of interest rates.When short-term rates are relatively high,short-term assets will be financed with long-term debt to reduce costs and risk.

Question

Quizplus · Accepted Answer

The maturity matching or "self-liquidating" approach involves financing assets with a similar maturity. Permanent net operating working capital would typically be financed with long-term capital, not a combination that varies with interest rates. The approach described mixes strategies and misinterprets the concept of maturity matching.

The Maturity Matching,or "Self-Liquidating," Approach Involves the Financing of Permanent