Short-term self-liquidating loans are intended to
A) finance capital assets.
B) finance merger/acquisition activity.
C) recapitalize the firm.
D) cover seasonal peaks in financing caused by inventory and receivable buildups.

Question

Quizplus · Accepted Answer

Short-term self-liquidating loans are specifically designed to cover seasonal peaks in financing caused by inventory and receivable buildups. These loans are meant to be repaid quickly as soon as the seasonal peak is over, which is why they are called "self-liquidating." They are not intended for financing capital assets, merger/acquisition activity, or recapitalization.

Short-Term Self-Liquidating Loans Are Intended to