[amp_mcq option1=”less project return” option2=”greater project return” option3=”shorter payback period” option4=”greater payback period” correct=”option3″]
The correct answer is C. shorter payback period.
Project liquidity is a measure of how quickly a project can be converted into cash. A shorter payback period means that the project will generate cash more quickly, which makes it more liquid.
A greater project return means that the project will generate more cash in total, but it does not necessarily mean that the project will generate cash more quickly. For example, a project with a high return might take many years to generate its first dollar of cash flow, while a project with a lower return might generate cash flow much more quickly.
A greater payback period means that the project will take longer to generate cash flow, which makes it less liquid.
Therefore, the correct answer is C. shorter payback period.