The cost of long-term debt generally ________ that of short-term debt.
A) is less than
B) is equal to
C) is greater than
D) has no relation to

Question

Quizplus · Accepted Answer

Long-term debt usually has a higher interest rate than short-term debt because lenders are taking on more risk by committing funds for a longer period of time. This higher interest rate compensates the lender for the extended risk exposure.

The Cost of Long-Term Debt Generally ________ That of Short-Term