The Risk to the Firm of Borrowing Using Short-Term Credit

question 28

True/False

The risk to the firm of borrowing using short-term credit is usually greater than if it used long-term debt.Added risk stems from (1)the greater variability of interest costs on short-term than long-term debt and (2)the fact that even if its long-term prospects are good,the firm's lenders may not be willing to renew short-term loans if the firm is temporarily unable to repay those loans.

---

Definitions:

Lexis

A comprehensive digital library and searchable database of legal and journalistic documents.

Conduct a Search

A process involving looking for information or resources through systematic investigation or examination.

Citator

A book or online service that provides the history and interpretation of a statute, regulation, or court decision and a list of the cases, statutes, and regulations that have interpreted, applied, or modified a statute or regulation.

Legal References

Legal references are citations or sources that provide authority or support for statements or arguments in legal documents and proceedings.