Short-term financing is risky because of the possibility of rising short-term rates and the inability to pay off debt within a short period of time.

Question

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Short-term financing typically involves borrowing money for periods of less than one year, making it vulnerable to changes in interest rates. If rates rise, it can be more difficult for a borrower to pay off the debt within the short time frame, potentially leading to default or financial strain. This makes short-term financing generally riskier than longer-term financing.

Short-Term Financing Is Risky Because of the Possibility of Rising