Which of the Following Statements Is FALSE

question 18

Multiple Choice

Which of the following statements is FALSE?

• A)On the other hand,by relying on short-term debt the firm exposes itself to funding risk,which is the risk of incurring financial distress costs should the firm not be able to refinance its debt in a timely manner or at a reasonable rate.
• B)An ultra-conservative policy would involve financing even some of the plant,property,and equipment with short-term sources of funds.
• C)With a conservative financing policy,the firm would use short-term debt very sparingly to meet its peak seasonal needs.
• D)Short-term debt can have lower agency and lemons costs than long-term debt,and an aggressive financing policy can benefit shareholders.