Asked by Christian Samuel on Jul 19, 2024
Verified
Short-term financing is less expensive than long-term financing but it has an increased level of risk.
Short-term Financing
Refers to the obtaining of loans or other monetary support for a period of typically less than one year, to address immediate financial needs.
Long-term Financing
Funding obtained for a time frame exceeding one year in duration, typically used for acquiring or investing in assets that have a long useful life.
- Appreciate the trade-offs involved in short-term vs long-term financing decisions.
Verified Answer
SS
Sikander SinghJul 24, 2024
Final Answer :
True
Explanation :
Short-term financing typically has lower interest rates or costs than long-term financing. However, because it must be repaid in a shorter period of time, there is a higher risk of default or inability to repay the loan.
Learning Objectives
- Appreciate the trade-offs involved in short-term vs long-term financing decisions.
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