The highest cost of short-term finance generally is
A) trade credit.
B) unsecured bank loans.
C) commercial paper.
D) factoring.
E) promissory notes.

Question

Quizplus · Accepted Answer

Factoring typically involves selling accounts receivable at a discount to a third party, often resulting in a higher cost of finance compared to other short-term options like trade credit, unsecured bank loans, commercial paper, or promissory notes. This is because the factor, or the third party purchasing the receivables, charges fees and takes on the risk of non-payment, leading to higher costs for the company using this financing method.

The Highest Cost of Short-Term Finance Generally Is