If the maturity of a company's liabilities is less than that of its assets,the company incurs a refinancing risk.

Question

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If a company's liabilities mature before its assets, then it will need to refinance its debts in order to maintain its operations. This exposes the company to refinancing risk, which is the risk that it may not be able to obtain new financing on favorable terms or at all, leading to default or financial distress.

If the Maturity of a Company's Liabilities Is Less Than