Why Will Banks Extend Short-Term Working Capital Financing to Companies

question 170

Multiple Choice

Why will banks extend short-term working capital financing to companies to which they would not extend long-term credit?

• A) Conditions are unlikely to deteriorate too badly in the short term.
• B) Working capital loans are "self-liquidating."
• C) The working capital itself can be used to collateralize the loan.
• D) All of the above

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Definitions:

New Issues

Refers to securities that are being offered to the public for the first time, such as through an initial public offering (IPO).

Stock

A type of financial security that denotes ownership in a corporation and represents a claim on part of the company's assets and earnings.

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Mutual funds are investment vehicles that pool money from numerous investors to purchase a diversified portfolio of stocks, bonds, or other securities.