Which of the Following Statements Is CORRECT

question 70

Multiple Choice

Which of the following statements is CORRECT?

• A) Trade credit is provided only to relatively large,strong firms.
• B) Commercial paper is a form of short-term financing that is primarily used by large,strong,financially stable companies.
• C) Short-term debt is favored by firms because,while it is generally more expensive than long-term debt,it exposes the borrowing firm to less risk than long-term debt.
• D) Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.
• E) Commercial paper is typically offered at a long-term maturity of at least five years.

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Definitions:

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than others.

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the value of the business's reputation, brand, and ongoing relations.

Comparative Advantage

The capacity of an entity to generate a product or service with a smaller opportunity cost compared to others.

Free-Trade Policies

Economic policies that allow imports and exports to occur without restrictive tariffs, quotas, or other barriers to trade.