Which of the Following Statements Is Correct

question 157

Multiple Choice

Which of the following statements is correct?

• A) Under normal conditions,the shape of the yield curve implies that the interest cost of short-term debt is greater than that of long-term debt,although short-term debt has other advantages that make it desirable as a financing source.
• B) Flexibility is an advantage of short-term credit but this is somewhat offset by the higher flotation costs associated with the need to repeatedly renew short-term credit.
• C) A short-term loan usually can be obtained more quickly than a long-term loan but the penalty for early repayment of a short-term loan is significantly higher than for a long-term loan.
• D) Statements about the flexibility,cost,and riskiness of short-term versus long-term credit are dependent on the type of credit that actually is used.
• E) 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:

Telegraphic

The use of short and precise words to communicate a message, similar to telegraph messages, often observed in the early speech of young children.

Speech Sounds

The sounds produced by humans to communicate through language, including vowels and consonants.

Puberty

The physical changes in the body that are a part of sexual development.

Primary Sex Characteristics

Physical development during puberty that results in sexually mature reproductive organs and genitals.