Which of the Following Is NOT a Common Characteristic of Issuing

question 49

Multiple Choice

Which of the following is NOT a common characteristic of issuing long-term debt?

• A)Issuing long-term debt decreases uncertainty compared to a short-term fixed-rate issue.
• B)Issuing long-term debt provides more frequent financing opportunities.
• C)Long-term interest rates are typically HIGHER than short-term rates.
• D)Long-term debt may be preferred because short-term debt financing could be problematic in the event of an economy-wide liquidity crisis.

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Definitions:

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Subsidies

Financial assistance provided by governments to individuals, businesses, or other entities, aimed at promoting economic activities that are deemed beneficial for the public interest.

Moral Hazard

A situation where one party engages in risky behavior knowing that it is protected against the consequences, typically because another party bears the cost of those actions.

Car-Insurance Coverage

Protection against financial loss resulting from incidents involving a vehicle, including accidents, theft, and other damages.