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

question 51

Multiple Choice

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

• A) Matching the maturities of assets and liabilities reduces risk.
• B) Short-term interest rates traditionally have been more stable than long-term interest rates.
• C) A firm that borrows heavily long-term is more apt to be unable to repay the debt than the firm that borrows heavily short-term.
• D) The yield curve traditionally has been downward sloping.
• E) Sales remain constant over the year,and financing requirements also remain constant.

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Definitions:

Chemical Barrier

A type of defense mechanism involving chemicals that deter or neutralize potential threats, used by organisms or in controlled environments.

Female Reproductive System

The assortment of inner and outer organs in females that are essential for the process of reproduction.

Male Reproductive System

The series of organs and structures in males responsible for producing sperm, transferring them to the female, and producing hormones like testosterone.

Male Reproductive System

The collection of organs and structures in males responsible for producing, maintaining, and transporting sperm and male sex hormones.