Which of the Following Reasons for Considering Long-Term Loans Inherently

question 116

Multiple Choice

Which of the following reasons for considering long-term loans inherently more risky than short-term loans is most accurate?

• A)There is a greater chance that a borrower will default in a longer time-frame.
• B)The penalties for closing out a long-term loan early make them unattractive to many investors.
• C)Long-term loans typically have ongoing costs that accumulate over the life of the loan.
• D)The loan values are very sensitive to changes in market interest rates.
• E)There is a greater chance that an investor will need cash before the loan term is complete.

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Definitions:

Chief Cells

Cells located in the stomach lining that secrete pepsinogen, an inactive precursor of the enzyme pepsin involved in protein digestion.

Parathyroid Gland

Small glands located behind the thyroid gland that regulate calcium levels in the blood through the secretion of parathyroid hormone.

Cortisol

Cortisol is a steroid hormone produced by the adrenal glands involved in the body's stress response as well as in metabolism, immune response, and regulation of inflammation.

Adrenal Gland

A pair of small glands located on top of each kidney that produce a variety of hormones including adrenaline and steroids.