Which of the Following Statements Is NOT CORRECT

question 124

Multiple Choice

Which of the following statements is NOT CORRECT?

• 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 management will result in most if not all permanent assets being financed with long-term capital.
• D) The risk to a firm that borrows with short-term credit is usually greater than if it borrowed using long-term debt.This added risk stems from the greater variability of interest costs on short-term debt and possible difficulties with rolling over short-term debt.
• E) Bank loans generally carry a higher interest rate than commercial paper.

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Definitions:

Cumulative Quantity Discounts

A pricing strategy that offers a discount based on the total quantity of goods a customer has purchased over a specified time period, encouraging repeat business.

Free Goods

Products or services offered without charge to the consumer, often used as promotional items, incentives, or part of a marketing strategy to attract attention or reward loyalty.

Customary Pricing Adjustments

Price changes that occur regularly based on established practices, market conditions, or negotiations, often seen in retail or service industries.

Geographical Adjustments

Modifications or changes in prices, products, or marketing strategies to accommodate specific geographic locations and cultural preferences.