Which of the Following Statements Is Incorrect

question 133

Multiple Choice

Which of the following statements is incorrect?

• A) Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.
• B) Accruals are "free" in the sense that no explicit interest is paid on these funds.
• C) A conservative approach to working capital will result in all permanent assets being financed using long-term securities.
• D) The risk to the firm of borrowing with short-term credit is usually greater than with long-term debt. Added risk can stem from greater variability of interest costs on short-term debt.
• E) Bank loans have a lower interest rate than commercial paper.

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Definitions:

Market System

An economic system relying on market forces to allocate resources and to determine and regulate prices for goods and services.

What Will Be Produced

A fundamental economic question that addresses the kinds of goods and services to be made available in an economy, determined by factors such as resources, technology, and consumer preferences.

Consumer Sovereignty

The idea that what consumers want influences the goods and services produced in an economy.

Conform To Consumer Demands

Adjusting product offerings, services, or business practices to meet the expectations and preferences of consumers.