Which of the Following Statements Is False

question 38

Multiple Choice

Which of the following statements is false?

• A) Financing part or all of the permanent working capital with short-term debt is known as an aggressive financing policy.
• B) When the yield curve is downward sloping, the interest rate on short-term debt is lower than the rate on long-term debt. In that case, short-term debt may appear cheaper than long-term debt.
• C) The value of short-term debt is less sensitive to the firm's credit quality than long-term debt; therefore, its value will be less affected by management's actions or information.
• D) Permanent working capital is the amount that a firm must keep invested in its short-term assets to support its continuing operations.

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Definitions:

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