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:

Antidepressant Drugs

Medications prescribed to relieve symptoms of depression by altering brain chemistry.

Moderate Depression

A mood disorder presenting with symptoms that are more severe than mild depression but not as intense as those found in major depression.

Second Messengers

Chemical changes within a neuron just after the neuron receives a neurotransmitter message and just before it responds.

Receptor Site

Part of a cell membrane that receives and binds specific substances such as hormones, neurotransmitters, or drugs, leading to a cellular response.