Short-Term Financing Is Riskier Than Long-Term Financing Since,during Periods of Tight

question 21

True/False

Short-term financing is riskier than long-term financing since,during periods of tight credit,the firm may not be able to rollover (renew)its debt.This is especially true if the funds are used to finance long-term assets rather than short-term assets.

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Definitions:

Variable Substitution

The process of replacing a variable in an equation or expression with a specific value.

Exponentiation

A mathematical operation involving two numbers, the base and the exponent, where the base is multiplied by itself as many times as indicated by the exponent.

System of Equations

A set of two or more equations with the same set of unknowns, which are solved simultaneously.

Variable Substitution

Replacing a variable in an equation or expression with its corresponding value.