Which Statement Best Describes Short-Term Versus Long-Term Financing

Multiple Choice

Which statement best describes short-term versus long-term financing?

A) Flexibility is an advantage of short-term credit, but this is somewhat offset by the high flotation costs associated with the need to repeatedly renew short-term credit.
B) A short-term loan can usually be obtained more quickly than a long-term loan, but the penalty for early repayment of a short-term loan is normally significantly higher than that for a long-term loan.
C) The flexibility, cost, and riskiness of short-term versus long-term credit are dependent on the type of credit that is actually used.
D) Short-term debt is often less costly than long-term debt, and the major reason for this is that short-term debt exposes the borrowing firm to much less risk than long-term debt.