QuestionDecember 15, 2025

Since short-term interest rates have historically averaged less than long -term rates, the heavy use of short-term debt is a conservative working capital financing strategy. True False

Since short-term interest rates have historically averaged less than long -term rates, the heavy use of short-term debt is a conservative working capital financing strategy. True False
Since short-term interest rates have historically averaged less than long -term rates, the heavy use of short-term debt is a
conservative working capital financing strategy.
True
False

Solution
3.3(212 votes)

Answer

False Explanation 1. Analyze the relationship between interest rates and risk Short-term debt usually has lower rates but higher refinancing risk than long-term debt. 2. Define conservative working capital financing Conservative strategy uses more long-term debt/equity to reduce risk, not short-term debt.

Explanation

1. Analyze the relationship between interest rates and risk<br /> Short-term debt usually has lower rates but higher refinancing risk than long-term debt.<br />2. Define conservative working capital financing<br /> Conservative strategy uses more long-term debt/equity to reduce risk, not short-term debt.
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