Which of the following is NOT a reason why a firm would choose to follow an aggressive financing policy?
A) to reduce sensitivity to the firm's credit quality
B) to reduce agency costs
C) to take advantage of lower interest rates
D) to reduce exposure to funding risk

Question

Quizplus · Accepted Answer

An aggressive financing policy involves using more debt financing to fund the firm's activities. This may increase exposure to funding risks, such as the risk of default if the firm is not able to make interest and principal payments on time. Therefore, D is the correct answer as an aggressive financing policy is not taken to reduce exposure to funding risk.

Which of the Following Is NOT a Reason Why a Firm