Which of the Following Statements Is Most Correct

question 102

Multiple Choice

Which of the following statements is most correct?

• A) Under normal conditions the shape of the yield curve implies that the interest cost of short-term debt is greater than that of long-term debt, although short-term debt has other advantages that make it desirable as a financing source.
• B) Flexibility is an advantage of short-term credit but this is somewhat offset by the higher flotation costs associated with the need to repeatedly renew short-term credit.
• C) A short-term loan can usually be obtained more quickly than a long-term loan but the penalty for early repayment of a short-term loan is significantly higher than for a long-term loan.
• D) Statements about the flexibility, cost, and riskiness of short-term versus long-term credit are dependent on the type of credit that is actually used.
• E) Short-term debt is often less costly than long-term debt and the major reason for this is that short-term debt exposes the borrowing firm to much less risk than long-term debt.

---

Definitions:

Scheduling

The action of arranging, controlling, and planning the time and resources for tasks, events, or activities to optimize efficiency.

Drive Home

Drive Home often means to emphasize or make a point clearly and forcefully.

Time Off Work

A period of leave from one's primary job or occupation for rest, personal, medical, or family reasons.

Home Care

Health or supportive services provided in the patient’s home by healthcare professionals or family members.