Which One Of The Following Terms Is Defined As The Management Of A Firm’s Long-Term Investments?
by Sourav Ganguly Investing 02 September 2021
Q1. Which One Of The Following Terms Is Defined As The Management Of A Firm’s Long-Term Investments?
A. Capital Budgeting
B. Working Capital Management
C. Agency Cost Analysis
D. Financial Allocation
The right answer to the question is ‘Capital Budgeting.”
Which one of the following terms is defined as the management of a firm’s long-term investments? When you want to find the right answer for it, first take a look at what long-term investments are.
Long-term investments are not only bonds and stocks. If you are asking about long-term investments, you get more options than stock and bonds. For example, management of a firm’s long-term investments can be the future goal and investments planning or the management’s policies.
What Are Long-Term Investments Of The Firm?
Long-term investments are investments that can not be sold in a year. More of the long-term investments will not be sold within a year. And most of the firm’s long-term investments are not going to be sold in the entire life.
In the right words, stocks and bonds are mainly long-term investments. Apart from the stocks and bonds, which investments are not cashout for a long time, those are called long-term investments.
Short-term investments are materialized within a very short period of time. Within a very short period of time, the short-term investments are materialized. And the long term investments are more about taking the market risk. But if you are analyzing the profit-making factors, you get to know the long-term investments are more profitable.
Long-term investments are also given the impression of how much potential to take the risk. Long-term investors are taking more risks to get better rewards.
Which One Of The Following Terms Is Defined As The Management Of A Firm’s Long-Term Investments?
Long-term investments are giving you knowledge about how much risk the firm can take to make a profit. When you want to correct the answer to the question, you get the four possible answers to the question.
The possible answers can be financial allocations, agency cost analysis, working capital management, and capital budgeting. If you have the exact knowledge of long-term investments, the answer will be easy for you. The right answer to the question is capital budgeting.
Why Capital Budgeting Is The Right Answer To The Question?
Now we think the answer of “which one of the following terms is defined as the management of a firm’s long-term investments?” Is clear to you. The correct answer to the question is capital budgeting, but why is capital budgeting the right answer to the question.
So take a look at what capital budgeting is.
Capital budgeting is a process by which the business undertakes major projects or investments. Capital budgeting is the technique by which the company has analyzed the factors they can take to get rejected the proposal. By using capital budgeting, the proposal’s cash flow is getting analyzed. If the cash flow is fixed and the future potential of permanent assets of the capital budgeting is getting analyzed.
Before purchasing any fixed assets, most of the capital budgeting processes are getting analyzed. And if the fixed assets have a good potential to give long-term profit, only the company is proceeding with the purchasing process.
Any shorts of long-term profit-making proposal is being carried out by the company.T making these progressive and profit-making decisions only capital budgeting is going to solve all the issues. Capital budgeting is increasing the accountability and measurability of the firm. The main role of capital budgeting is to measure out the cash flow, throughput, and payback of the proposal.
Frequently Asked Questions
Q1. Is 10 years a long-term investment?
Definitely, 10 years is a long term investment. the best investment for 10 years is Stock funds, growth stocks, bond funds, dividend stocks, etc.
Q2. What are long term investments examples?
Some best examples of long term investments in 2021 are mutual funds, Gold, Equity funds, real estate, bonds, etc.
Q3. Is long-term investing worth it?
Wrapping It Up:
The answer to “which one of the following terms is defined as the management of a firm’s long-term investments?” Here clearly shows you why capital budgeting is the right answer to the questions. Capital budgeting itself is the permanent assets of the long-term investments of the management.
Because of capital budgeting, you are choosing your fixed assets and the future strength of the firm. This is why capital budgeting is the right answer to the question. So what is your opinion? If you want to know any other questions, do not forget to share your questions in the comment sections. We will give you an accurate answer with explanations.
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