Question

The financing policy that will result in investing in marketable securities when asset requirements are low is referred to as_________:

O restrictive financing.
O compromise financing.
O flexible financing.
O none of the options.

Answer 1

The answer is restrictive financing.

Step-by-step explanation:

The financing policy that will result in marketable securities when asset requirements are low is referred to as restrictive financing.

Marketing securities are the liquid asset on the balance sheet of a financial report, means that it can easily be converted to cash. it has stocks, bonds and other securities that are brought and sold daily.

The flexible policy maintains a higher ratio of cash, bonds whereas the restrictive maintains the smaller ratio between the current to the sales.

The three methods of working capital financing are maturity matching, conservative and aggressive.

Answer 2

The financing policy that will result in investing in marketable securities when asset requirements are low is referred to as "restrictive financing".

Step-by-step explanation:

Restrictive financing:

This a financial policy which limits a "low ratio of current assets to sale". This is done for "short-term". This holds right for the given sentence.

Flexible financing:

This is opposite to "Restrictive financing" where it maintains a "high ratio of current assets to sales".

Compromise financing:

This firm reserves liquidity so that those funds can be used in the initial seasonal variation and can satisfy current asset needs. It uses Short-term borrowing when the reserve is exhausted.