Which of the Following Statements Is CORRECT

question 66

Multiple Choice

Which of the following statements is CORRECT?

• A) Conservative firms generally use no short-term debt and thus have zero current liabilities.
• B) A short-term loan can usually be obtained more quickly than a long-term loan, but the cost of short-term debt is normally higher than that of long-term debt.
• C) If a firm that can borrow from its bank at a 6% interest rate buys materials on terms of 2/10 net 30, and if it must pay by Day 30 or else be cut off, then we would expect to see zero accounts payable on its balance sheet.
• D) If one of your firm's customers is "stretching" its accounts payable, this may be a nuisance but it will not have an adverse financial impact on your firm if the customer periodically pays off its entire balance.
• E) Under normal conditions, a firm's expected ROE would probably be higher if it financed with short-term rather than with long-term debt, but using short-term debt would probably increase the firm's risk.

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Definitions:

Arkansas Prison

The correctional system in the state of Arkansas, consisting of various facilities and institutions for incarcerating convicted individuals.

Free Exercise Clause

A provision in the First Amendment of the US Constitution that protects individuals' rights to practice their religion freely, barring any harm to others.

First Amendment

An amendment to the United States Constitution that guarantees freedoms concerning religion, expression, assembly, and the right to petition. It forbids Congress from both promoting one religion over others and also restricting an individual's religious practices.

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A U.S. federal law intended to prevent laws that substantially burden a person's free exercise of their religion.