Which of the Following Statements Is NOT CORRECT

question 108

Multiple Choice

Which of the following statements is NOT CORRECT?

• A) Accruals are "free" in the sense that no explicit interest is paid on these funds.
• B) A conservative approach to working capital management will result in most, if not all, permanent current operating assets being financed with long-term capital.
• C) 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.
• D) Bank loans generally carry a higher interest rate than commercial paper.
• E) Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.

---

Definitions:

Contractual Vertical Marketing System

A coordinated marketing system among businesses at different levels of the supply chain, established through contracts to maximize efficiency and profitability.

Functional Economies

Economic systems oriented towards the efficient and sustainable provisioning of goods and services to meet human needs.

Retailers

Businesses or individuals that sell goods directly to consumers, usually in small quantities, from a physical space or online platform.

Service-sponsored Franchise Systems

A franchising approach where the franchisor provides a comprehensive service package to the franchisee, including training, branding, and ongoing support, typically seen in hospitality and retail industries.