Which of the following statements about short-term funding strategy is true?
A) All seasonal working capital needs and a portion of permanent working capital and fixed assets are funded with short-term debt.
B) The downside to this strategy is that a portion of a firm's long-term assets must be periodically refinanced over their working lives.
C) It can take advantage of an upward-sloping yield curve and lower a firm's overall cost of funding.
D) All of the above

Question

Quizplus · Accepted Answer

All of the statements are true regarding short-term funding strategy. The first statement highlights the usage of short-term debt in funding seasonal working capital needs and a portion of permanent working capital and fixed assets. The second statement describes the downside of this strategy, which involves the periodic refinancing of a firm's long-term assets over their working lives. The third statement indicates that a firm can take advantage of an upward-sloping yield curve and lower its overall cost of funding by using short-term debt.

Which of the Following Statements About Short-Term Funding Strategy Is