The Risk to the Firm of Borrowing Using Short-Term Credit

question 16

True/False

The risk to the firm of borrowing using short-term credit is usually greater than if it used long-term debt.Added risk stems from greater variability of interest costs on short-term debt.Even if its long-term prospects are good,the firm's lender may not renew a short-term loan if the firm is even temporarily unable to repay it.

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Definitions:

Conversion Disorder

A mental condition where psychological stress is expressed through physical symptoms that have no medical basis.

Dissociative Amnesia

A disorder characterized by the inability to recall important personal information, usually resulting from trauma or stress.

Organic Amnesia

A memory disorder usually caused by brain damage or disease, where the ability to learn new information or retrieve information formed before the incident is impaired.

Psychogenic Amnesia

A memory disorder characterized by sudden temporary memory loss, that cannot be attributed to a neurological condition.