All of the following are potential disadvantages of short-term debt except:
A) short-term debt must be paid back more quickly than long-term debt.
B) uncertainty of interest costs because short-term debt must be replaced often.
C) a greater risk of illiquidity than long-term debt.
D) short-term debt generally has a higher interest cost than long-term debt.

Question

Quizplus · Accepted Answer

The statement "short-term debt generally has a higher interest cost than long-term debt" is not a potential disadvantage of short-term debt. In fact, short-term debt often has a lower interest rate than long-term debt, but the uncertainty of interest costs can be a disadvantage. Choices A, B, and C are all potential disadvantages of short-term debt.

All of the Following Are Potential Disadvantages of Short-Term Debt