Question：The matching principle of finance will determine the mix of :
A. Debt and equity in a company.
B. Ordinary and preferred shares that a company issues.
C. Fixed and variable interest rates paid by a company.
D. Long-term and short-term finance in a company.
The correct answer is:Long-term and short-term finance in a company.
The matching principle of finance is that a company should match long-term finance to long-term funds and use short-term funds for short-term assets. Long-term finance may be debt, equity or preferred shares.
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