Question

What is the significance of a company's strong financial strength and goodwill in the context of fixed deposits?

a.

Companies with strong financial strength offer lower interest rates.

b.

Companies with strong financial strength may pay less interest.

c.

Companies with strong financial strength are more likely to disappear.

d.

Companies with strong financial strength are considered safe for fixed deposit investors.

Posted under IC 89 Management Accounting

Answer: (b).Companies with strong financial strength may pay less interest. Explanation:Companies with strong financial strength may pay less interest, and the weaker ones are forced to offer a little more reward (interest) to compensate investors for the extra risks.

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Q. What is the significance of a company's strong financial strength and goodwill in the context of fixed deposits?
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