Firms Generally Choose to Finance Temporary Current Operating Assets with Short-Term

question 111

Multiple Choice

Firms generally choose to finance temporary current operating assets with short-term debt because

• A)matching the maturities of assets and liabilities reduces risk under some circumstances, and also because short-term debt is often less expensive than long-term capital.
• B)short-term interest rates have traditionally been more stable than long-term interest rates.
• C)a firm that borrows heavily on a long-term basis is more apt to be unable to repay the debt than a firm that borrows short term.
• D)the yield curve is normally downward sloping.
• E)short-term debt has a higher cost than equity capital.

---

Definitions:

Intensive Firsthand Contact

Direct and deep engagement with individuals, groups, or settings, often used in qualitative research to gain a detailed understanding of subjects' perceptions and behaviors.

Ethnocide

The deliberate and systematic destruction of the culture of an ethnic group, involving the eradication of cultural artifacts, languages, and practices.

Adjudication

A formal judgment on a disputed matter, often resulting from a judicial hearing or legal proceedings.

Exasperation

A feeling of intense irritation or annoyance.