The Main Difference Between Short-Term and Long-Term Finance Is

question 47

Multiple Choice

The main difference between short-term and long-term finance is

• A)the risk of long-term cash flows is more important than short-term risks.
• B)long-term cash flows have greater present values than short-term cash flows.
• C)short-term cash flows occur within a year or less.
• D)All of these answers are correct.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold, determined by the supply and demand dynamics in the market.

Rights Offering

A method by which a company raises capital by offering existing shareholders the chance to buy additional shares at a discount.

Market Price

The current selling or buying price of a service or asset in the market.

New Equity Issue

The process through which a company raises capital by selling shares of stock to the public or private investors for the first time.