Which of the Following Statements Is CORRECT

question 29

Multiple Choice

Which of the following statements is CORRECT?

• A) Under normal conditions,a firm's expected ROE would probably be higher if it financed with short-term rather than with long-term debt,but using short-term debt would probably increase the firm's risk.
• B) Conservative firms generally use no short-term debt and thus have zero current liabilities.
• C) A short-term loan can usually be obtained more quickly than a long-term loan,but the cost of short-term debt is normally higher than that of long-term debt.
• D) If a firm that can borrow from its bank at a 6% interest rate buys materials on terms of 2/10,net 30,and if it must pay by Day 30 or else be cut off,then we would expect to see zero accounts payable on its balance sheet.
• E) If one of your firm's customers is "stretching" its accounts payable,this may be a nuisance but it will not have an adverse financial impact on your firm if the customer periodically pays off its entire balance.

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Definitions:

Social Power

The ability to influence or control the behavior of others within a social framework, often derived from one's position, resources, or relationships.

Influence

The capacity to have an effect on the character, development, or behavior of someone or something.

Social Relation

The interaction between two or more individuals, influencing each other's behaviors and actions within society.

Information Power

The capability to influence others' behavior or decision-making process due to possessing specific knowledge or expertise.