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 higher on long-term debt, not short-term debt. Short-term debt typically carries lower interest rates since lenders are taking less risk by lending over a shorter period of time.

Which of the Following Is Not True Regarding the Use