Why Would a Firm Ever Use Short-Term Debt to Finance

question 63

Multiple Choice

Why would a firm ever use short-term debt to finance permanent current assets?

• A)This would be illogical and is rarely observed.
• B)This would occur if short-term rates were much lower than long-term rates.
• C)This would only occur if the managers were very conservative.
• D)None of these.

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