The Use of Short-Term Debt Provides Flexibility in Financing Since

question 80

True/False

The use of short-term debt provides flexibility in financing since the firm is only paying interest when it is actually using the borrowed funds.

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Definitions:

Discounted Note

A debt instrument sold for less than its face value that will pay the face value at maturity.

Proceeds

Maturity value less bank discount.

Contingent Liability

Liability on the part of one who discounts a note if the maker of the note defaults at maturity date.