Which of the Following Statements Is CORRECT

question 81

Multiple Choice

Which of the following statements is CORRECT?

• A) Trade credit is provided only to relatively large, strong firms.
• B) Commercial paper is a form of short-term financing that is primarily used by large, strong, financially stable companies.
• C) Short-term debt is favored by firms because, while it is generally more expensive than long-term debt, it exposes the borrowing firm to less risk than long-term debt.
• D) Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.
• E) Commercial paper is typically offered at a long-term maturity of at least five years.

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Definitions:

Factor Market

A marketplace where factors of production (land, labor, capital, entrepreneurship) are bought and sold, affecting the prices and allocation of these resources.

Resource

Anything, such as land, labor, and capital, that can be used to produce something else; includes natural resources (from the physical environment) and human resources (labor, skill, intelligence).

Circular-Flow Diagram

A visual model that depicts how goods, services, and money move through an economy, illustrating the interactions between households and firms.

Sector

A distinct subset of a market, economy, or field of operation, often categorized by similar characteristics or types of economic activity.