Which of the following is true of long-term funds?
A) They provide an easy way to reduce financing costs because they are relatively cheaper than short-term funds.
B) They are a type of investment fund which invests in money market investments of high quality and low risk.
C) They are the sources that supply the financing necessary to support a firm's capital budgeting activities.
D) They are the funds available to a business on the basis of inventory held and require detailed inventory tracking.

Question

Quizplus · Accepted Answer

Long-term funds provide the financing necessary to support a firm's capital budgeting activities, such as investing in fixed assets, expanding production capacity or undergoing research and development activities. They are usually sourced through the issuance of bonds or equity, which have a longer maturity date than short-term funds. Options A, B, and D do not accurately describe long-term funds.

Which of the Following Is True of Long-Term Funds