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

question 28

True/False

The risk to the firm of borrowing using short-term credit is usually greater than if it used long-term debt.Added risk stems from (1)the greater variability of interest costs on short-term than long-term debt and (2)the fact that even if its long-term prospects are good,the firm's lenders may not be willing to renew short-term loans if the firm is temporarily unable to repay those loans.

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Definitions:

Brightness

The perception of how light or dark an object appears to the human eye.

Basilar Membrane

A structural element within the cochlea of the inner ear, critical in the process of sound perception and auditory signal transduction.

Hair Cells

Sensory receptors located within the inner ear that are essential for hearing and balance.

Gustation

Gustation is the sense of taste, a chemical sense controlled by taste buds in the mouth that interact with various substances.