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    Maturity Matching principle

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    Describe the maturity matching principle. What are the risks of not matching maturities? How would you characterize a firm that ignores the principle? Can you think of situations in which it would be advisable for an otherwise prudent firm to deviate from the principle?

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    The maturity matching principle says that financing to support assets and projects should be repayable at the time those items generate enough cash to make the repayments.

    Financing long term items with short term money tends to ...

    Solution Summary

    The maturity matching principle says that financing to support assets and projects should be repayable at the time those items generate enough cash to make the repayments.

    Financing long term items with short term money tends to reduce interest costs (short term rates are generally lower) but exposes one to the risk that...

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