Excessive Short-Term fiNancing Is a Primary Reason Why fiRms Have

question 309

True/False

Excessive short-term financing is a primary reason why firms have cash surpluses.

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Definitions:

Matures

Refers to the final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.

Par-value

The par value of a bond, share of stock, or coupon as declared by the issuer.

Yield To Maturity

The total return anticipated on a bond if held until it matures, including all interest payments and the repayment of principal.

Zero-coupon Bonds

Bonds that do not offer interest payments but are sold at a deep discount to their face value, maturing at par.