Which of the following statements is NOT CORRECT?
A) Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.
B) Accruals are "free" in the sense that no explicit interest is paid on these funds.
C) A conservative approach to working capital management will result in most if not all permanent current operating assets being financed with long-term capital.
D) 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.

Question

Quizplus · Accepted Answer

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

Which of the Following Statements Is NOT CORRECT