Which of the Following Statements Is NOT CORRECT

question 121

Multiple Choice

Which of the following statements is NOT CORRECT?

• A) Accruals are "free" in the sense that no explicit interest is paid on these funds.
• B) A conservative approach to working capital management will result in most, if not all, permanent current operating assets being financed with long-term capital.
• C) The risk to a firm that borrows with short-term credit is usually greater than if it borrowed using long-term debt.This added risk stems from the greater variability of interest costs on short-term debt and possible difficulties with rolling over short-term debt.
• D) Bank loans generally carry a higher interest rate than commercial paper.
• E) Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.