6-24 Finance companies have relied primarily on short-term commercial paper and other debt sources to finance asset growth.

Question

Quizplus · Accepted Answer

Finance companies typically rely on short-term debt sources, such as commercial paper, to finance their asset growth. This is because they specialize in lending money to individuals and businesses and, therefore, need to maintain a constant flow of funds to lend out. Short-term debt allows them to borrow money quickly and easily, which they can then use to make short-term loans to borrowers.

6-24 Finance Companies Have Relied Primarily on Short-Term Commercial Paper