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.

Question

Quizplus · Accepted Answer

Commercial paper is a short-term, unsecured debt instrument issued by corporations with high credit ratings. Not every firm can issue commercial paper; it is typically limited to financially stable and reputable companies because investors need assurance that the issuing company is a good credit risk.

Which of the Following Statements Is NOT CORRECT