Firms Generally Choose to Finance Temporary Assets with Short-Term Debt

Multiple Choice

Firms generally choose to finance temporary assets with short-term debt because

A) Matching the maturities of assets and liabilities reduces risk.
B) Short-term interest rates traditionally have been more stable than long-term interest rates.
C) A firm that borrows heavily long-term is more apt to be unable to repay the debt than the firm that borrows heavily short-term.
D) The yield curve traditionally has been downward sloping.
E) Sales remain constant over the year,and financing requirements also remain constant.