Which of the following is NOT true regarding the use of short-term debt?
A) It must be rolled over more often than long-term debt.
B) There is uncertainty connected with interest costs on short-term debt from year to year.
C) The firm is subjected to greater liquidity risk when using short-term credit.
D) Interest rates are usually higher on short-term debt.

Question

Quizplus · Accepted Answer

Interest rates are usually lower on short-term debt. This is because short-term debt has a lower risk of default compared to long-term debt. However, the other statements are true regarding the use of short-term debt.

Which of the Following Is NOT True Regarding the Use