Which of the following statements is NOT true?
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 will result in all permanent assets being financed with long-term capital.
D)The risk to the firm of borrowing with short-term credit is usually greater than with long-term debt. Added risk can stem from the greater variability of interest costs on short-term debt.

Question

Quizplus · Accepted Answer

Commercial paper is a short-term unsecured promissory note issued by high-credit-quality corporations. Not "virtually any firm" can issue commercial paper; it is typically limited to financially stable and highly rated companies because of the unsecured nature of the debt.

Which of the Following Statements Is NOT True