Which of the Following Statements Concerning Liquidity and Debt Is

question 14

Multiple Choice

Which of the following statements concerning liquidity and debt is true?

• A) The greater the use of short-term debt, the lower the risk of illiquidity.
• B) Long-term debt is generally less costly than short-term debt.
• C) A firm can reduce its risk for illiquidity by shifting from short-term debt to long-term debt.
• D) The risk of illiquidity does not depend on the mix of short-term versus long-term debt.

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Definitions:

Cable Television

A system of delivering television programming via coaxial or fiber-optic cables, offering a wide range of channels and services.

Natural Monopoly

A market condition where the most efficient number of firms in the industry is one, due to the high infrastructure or fixed costs associated with distribution networks.

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting the value they place on it.

Income

The extraction of financial value, repetitively over time, from working engagements or investment pursuits.