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

question 6

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 the options.

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Definitions:

Mild Hallucinations

Sensory experiences that appear real but are created by the mind, often less intense or disturbing than full-blown hallucinations.

Sensory Awareness

The consciousness or alertness of the sensations experienced through the five senses.

Drug

Any substance that causes a change in an organism's physiology or psychology when consumed.

Multifactorial Causation

A concept that an event or condition is the result of multiple factors working together, not just a single cause.