All of the Following Are Potential Disadvantages of Short-Term Debt

question 66

Multiple Choice

All of the following are potential disadvantages of short-term debt EXCEPT

• A) short-term debt must be paid back more quickly than long-term debt.
• B) uncertainty of interest costs because short-term debt must be replaced often.
• C) a greater risk of illiquidity than long-term debt.
• D) short-term debt generally has a higher interest cost than long-term debt.

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Definitions:

U.S. Dollar

The recognized money of the United States, extensively utilized as a standard and reserve currency globally.

Currency Depreciation

A decrease in the value of one currency relative to another currency in the foreign exchange market.

Foreign Exchange Market

A global trading space for the exchange of different countries' currencies.

Imports

Goods or services brought into one country from another for sale, often subject to tariffs, quotas, and trade agreements.