Which of the following increases financial risk?
A) the substitution of equity for short-term debt
B) the substitution of short-term debt for long-term debt
C) the substitution of long-term debt for short-term debt
D) the reduction of cash and marketable securities

Question

​Which of the following increases financial risk?
A) ​the substitution of equity for short-term debt
B) ​the substitution of short-term debt for long-term debt
C) ​the substitution of long-term debt for short-term debt
D) ​the reduction of cash and marketable securities

Quizplus · Accepted Answer

Substituting short-term debt for long-term debt increases financial risk because short-term debt needs to be refinanced more frequently, which can lead to liquidity issues and higher interest rate risk.

​Which of the Following Increases Financial Risk

Which of the Following Increases Financial Risk