The Risk to the Firm of Borrowing Using Short-Term Credit

question 134

True/False

The risk to the firm of borrowing using short-term credit is usually greater than with long-term debt. Added risk stems from greater variability of interest costs on short-term debt. Even if its long-term prospects are good, the firm's lender may not renew a short-term loan if the firm is even only temporarily unable to repay it.

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Definitions:

Motivations

The reasons or driving forces behind individuals' actions or behaviors, which can stem from internal desires or external influences.

Preferences

Individuals' tendencies to favor certain options, choices, or experiences over others, based on personal tastes or values.

Big Five

A model describing human personality through five broad dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Personality Factors

Key traits or characteristics that constitute an individual's distinct personality, influencing behavior and attitudes.