In economic conditions characterized by a scarcity of short-term funds, a firm would best choose the ________ financing strategy.
A) aggressive
B) conservative
C) permanent
D) seasonal

Question

Quizplus · Accepted Answer

During a scarcity of short-term funds, a conservative financing strategy would be best for a firm. This would involve relying more on long-term financing options and reducing short-term debt. This approach helps to minimize the risk of defaulting on short-term debt obligations and reduces the possibility of having to liquidate assets quickly to meet short-term commitments. Therefore, choice (B) is the best option for a firm under these economic conditions.

In Economic Conditions Characterized by a Scarcity of Short-Term Funds