Generally, more use is made of short-term financing because: A

Business Dec 10, 2020

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. Both A and B.

Expert Solution

Answer:D. Both A and B.

Most of the firms will prefer to use short-term sources of finances because:

The short-term sources of finances are mostly cheaper due to the low-interest rate.
In most cases, firms are blocked from accessing long-term sources of finances due to a lack of collateral.

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