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True or False Although interest rates are generally higher on long-term debt, using more long-term debt...

True or False

Although interest rates are generally higher on long-term debt, using more long-term debt rather than short-term debt can reduce the risk of illiquidity and decrease uncertainty related to interest rate changes.

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Answer #1

Statement is True : Although interest rates are generally higher on long-term debt, using more long-term debt rather than short-term debt can reduce the risk of illiquidity and decrease uncertainty related to interest rate changes.

long term debt will not require company to pay the loan amount in near future. this will enable company to maintain its liquidity.

While short term debt will require payment of loan amount in near future which may impact firms's liquidity

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