Generally, more use is made of short-term financing because
A) short-term interest rates are generally lower than long-term interest rates.
B) most firms do not have basic access to the capital markets.
C) short-term financing is usually more predictable than long-term financing.
D) short-term interest rates are generally lower than long-term interest rates and most firms do not have basic access to the capital markets.

Question

Quizplus · Accepted Answer

Short-term financing is preferred due to its lower interest rates and most firms do not have easy access to the capital markets to obtain long-term financing. Additionally, short-term financing is usually more predictable as it is used to meet the immediate financial needs of the company, allowing for more flexibility in adjusting to changes in the market.

Generally, More Use Is Made of Short-Term Financing Because