The Two Reasons Most Experts Give for the Existence of a Positive

question 43

True/False

The two reasons most experts give for the existence of a positive maturity risk premium are (1)because investors are assumed to be risk averse,and (2)because investors prefer to lend long while firms prefer to borrow short.

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Definitions:

Liabilities

Financial debts or obligations that arise during the course of business operations, owed by a company to another entity.

Accounts Receivable

Funds that customers are yet to pay to a company for products or services already provided.

Credit Sales

Sales made by a business where payment is delayed, allowing the buyer to purchase goods or services on credit.

Direct Method

A way of reporting cash flows from operating activities that lists major categories of gross cash receipts and gross cash payments.