When completing a large debt issue, financial managers of large firms will usually consider the following questions:
I.Should the firm borrow short term or long term?
II.Should the firm issue fixed- or floating-rate debt?
III.Should the firm borrow in foreign currency?
A)I only
B)II only
C)III only
D)I, II, and III

Question

Quizplus · Accepted Answer

Financial managers should consider all three questions when completing a large debt issue. The choice between short- or long-term borrowing depends on the firm's financing needs and risk tolerance. Fixed-rate debt provides stability and predictability in interest expenses, while floating-rate debt can provide flexibility in a changing interest rate environment. Borrowing in foreign currency can provide benefits such as lower interest rates, but it also exposes the firm to exchange rate risk. Therefore, all three questions should be carefully evaluated before making a decision on a large debt issue.

When Completing a Large Debt Issue, Financial Managers of Large