Large companies build up short-term debt over the period of 1 to 2 years, then sell long-term debt using a portion of the proceeds to repay the short-term borrowings.This procedure is called:
A)"drawing down" long-term credit
B)funding short-term debt
C)reducing the tax bite
D)extending the rates

Question

Quizplus · Accepted Answer

This procedure is referred to as funding short-term debt. Companies use the proceeds from the sale of long-term debt to retire short-term debt, thereby avoiding the risk of having to continuously roll over short-term debt.

Large Companies Build Up Short-Term Debt Over the Period of 1