1. Why does the typical firm need to make investments in working capital?

2. Define and describe the difference between the operating cycle and cash conversion cycle for a typical manufacturing company.

3. Discuss the probability versus risk trade-offs associated with alternative levels of working capital investment.

4. Describe the difference between permanent current assets and fluctuating current assets.

5. Why is it possible for the effective cost of long-term debt to exceed the cost of short-term debt, even when short-term interest rates are higher than long-term rates?

6. Describe the matching approach for meeting the financing needs of a company. What is the primary difficulty in implementing this approach?

7. Discuss the probability versus risk trade-offs associated with alternative combinations of short-term and long-term debt used in financing a company's assets.