At the extreme, a firm that adheres to the conservative approach to finance current assets will finance all of its seasonal needs with long-term financing alternatives, thereby eliminating the need to use short-term financing. Such a firm will have extra permanent funds during off-peak periods, allowing it to store liquidity in the form of short-term investments during the off-season. a) trueb) false

The correct answer is A) True

Explanation:

Seasonal needs are short-term in nature. To service them using short-term funds would prove more expensive over the long run.

Long-term finance in most cases have the characteristics of being relatively cheaper than short-term finance.

Chief among the sources of short-term finance are:

Short-term finances are usually less than a year. Whilst long-term finances generally span over one year.

Examples of long term finances are:

Interest payable on long term debts are usually single-digit whilst those on short term loans are usually double-digit.

As indicated in the information provided, companies that keep extra "permanent" funds preserve its value by placing it in short term investments

Cheers!

the answer to this question would be shared investment

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