Answer (D) is correct . Maturity matching, or equalizing the life of an asset and the debt instrument used to finance that asset, is a hedging approach. The basic concept is that the company has the entire life of the asset to recover the amount invested before having to pay the lender.
Answer (A) is incorrect because Working capital management is short-term asset management.
Answer (B) is incorrect because Return maximization is more aggressive than maturity matching. It entails using the lowest cost forms of financing.
Answer (C) is incorrect because Financial leverage is the relationship between debt and equity financing.
|
