Firms Generally Choose to Finance Temporary Current Assets with Short-Term

question 22

Multiple Choice

Firms generally choose to finance temporary current assets with short-term debt because

• A) matching the maturities of assets and liabilities reduces risk under some circumstances,and also because short-term debt is often less expensive than long-term capital.
• B) short-term interest rates have traditionally been more stable than long-term interest rates.
• C) a firm that borrows heavily on a long-term basis is more apt to be unable to repay the debt than a firm that borrows short term.
• D) the yield curve is normally downward sloping.
• E) short-term debt has a higher cost than equity capital.

Comprehend the role of good faith and commercial reasonableness in sales and lease contracts.

Analyze the impact of agreed-on remedies and variations by agreement on the rights and obligations under the UCC.

Apply the concepts related to breach of warranty and the measure of recovery for breaches.

Compare the UCC with the United Nations Convention on Contracts for the International Sale of Goods regarding delivery obligations and damages.

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