Which of the Following Statements Best Describes Short-Term Versus Long-Term

question 28

Multiple Choice

Which of the following statements best describes short-term versus long-term financing?

• A) Flexibility is an advantage of short-term credit, but this is somewhat offset by the high flotation costs associated with the need to repeatedly renew short-term credit.
• B) 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 normally significantly higher than that for a long-term loan.
• C) The flexibility, cost, and riskiness of short-term versus long-term credit are dependent on the type of credit that is actually used.
• D) 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.

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Definitions:

Type A Personality

Type A personality is characterized by high levels of competitiveness, self-imposed stress, and a constant sense of urgency.

Perceive Major Life Changes

The recognition or awareness of significant transformations in one's personal life circumstances.

Chronic Sense

A persistent or long-standing feeling or perception, often associated with a particular attitude or outlook.

Time Urgency

The pressure to complete tasks rapidly or within a tight deadline, often leading to increased stress levels.