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.

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Definitions:

Federal Statutes

Laws enacted by the national government of the United States that apply across the country.

Valid Treaties

Legally binding agreements between countries that are recognized and enforceable under international law.

Independent Nations

These are sovereign states that operate and make decisions independently from other entities and have full control over their own territory.

Regional Trade Communities

are groups of neighboring countries that have agreed to significantly reduce or eliminate trade barriers among themselves.