What are some advantages and disadvantages of short-term versuslong-term debt?

Q: What are some of the risks involved in short-term vs. long-term financing ?

A: Financing refers to providing or borrowing capital so as to run the operations of the business…

Q: If short-term interest rates are lower than long-term rates, why might a borrower stillchoose to…

A: Short term interest rate refers to the rates that are charged on a short-term loan or debt amounts.…

Q: How much is the gain on debt restructuring?

A: Given data,   Old liability: Principal=P9,000,000 Accrued Interest=P810,000 Interest Rate: 9%   New…

Q: When should debt security be classified as held-to-maturity?

A: Debt: A debt security should be classified as held to maturity only if the company has both the…

Q: What is marginal rate (for debt)?

A: Marginal rate of debt is the rate of interest expected by the investors on their debt instruments…

Q: What are advantages of debt financing?

A: The advantage of debt financing: Ownership remains with the person itself as when the person agrees…

Q: Why is the relevant cost of debt the interest rate on new debt, not that on alreadyoutstanding, or…

A: The pre-tax cost of debt for a company, rd, is the interest rate the company should settle on fresh…

Q: What evidence is necessary to demonstrate the ability toconsummate the refinancing of short-term…

A:

Q: State the advantages of long-term debt financing.

A: Long Term Debt Financing: It refers to the debt financing required by the firm which usually has a…

Q: What is meant by Short-term financing?

A: Finance refers to the study of money , currency as well as the capital assets.There are basically…

Q: What is a debt security?

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: How do Debt, CoCo, and equity price react respectively to the fluctuation of the financial market?…

A: The question is based on the concept of components of capital used by banking companies. A bank can…

Q: What are the primary differences between debt financing and equity financing?

A: Financing refers to providing the funds to the business for business activities, individuals and…

Q: From the standpoint of a borrower, is long-term or short-term credit riskier? Explain

A: credit risk is define as the chances of a loss due to  borrower's failure to repay obligation in…

Q: What is the significance of a debt coverage ratio?

A: Debt service coverage ratio (DSCR) is one of the numerous financial proportions that moneylenders…

Q: From the standpoint of the borrower, is long-term or short-term credit riskier? Explain. Would it…

A: Answer: From the borrower’s point of view, the two reasons why short term loans are considered…

Q: Explain an example of debt investment.

A: Debt Investment Debt Investment is refer as when the company raises the money by selling the debt…

Q: Why What kind of stream of income does a debt security pay for the duration of the security? A fixed…

A: The Answer

Q: Explain the addition to the interest rate, HELOC borrowers consider the issues?

A: Home buyers mostly take loans to buy the home and they will pay the debt in equated installments.…

Q: What is market debt ratio?

A: Debt ratio: The debt ratio is a financial ratio that quantifies the degree of a corporation’s…

Q: ________ are long-term debt instrument that promise a fixed income in the form of interest.

A: Debt instrument is a way of financing which can guarantee a fixed income, hence a less risky…

Q: What is the indifference point under the net present value? When would there be a discount on a…

A: SOLUTION- NET PRESENT VALUE = PRESENT VALUE OF CASH INFLOW - PRESENT VALUE OF CASH OUTFLOW.

Q: How can we determine the borrowing rate of return?

A: The borrowing rate of return is the return that is charged on the borrowings made by the firms or…

Q: What is duration gap model? Explain the concept of duration. How duration measure can be used to…

A: Duration gap measures the mismatch between the duration of assets and liabilities held by a…

Q: When should a debt security be classified as held-tomaturity?

A: Debt securities: Debt security is money borrowed at a specific rate of interest which must be repaid…

Q: What is the difference between interest rate risk and default risk? How do combinations of terms in…

A: Interest rate risk is the risk of an investment due to changes in interest rate. When market rates…

Q: How do inflationary expectations influence interest rates on mortgage loans?

A: Inflation: It is the rate at which the purchasing power of the money decreases every year.…

Q: State the disadvantages of long-term debt financing.

A: Long term debt refers to the debt that has a maturity period of more than 1 year.They are also…

Q: What do we call the cost that a borrower must payto use debt capital?

A: Debt capital is the capital that is borrowed from various financial institutions or other lenders…

Q: In what way do current liabilities and long-term liabilities differ from each other?

A: Current liabilities are liabilities that are due within one year. In other words, current…

Q: Is Collateralized debt obligation a good investment? Please explain in details.

A: A collateralized debt obligation also known as a CDO is a complex structured credit product which is…

Q: Describe the disadvantages of different methods of short-term debt financing.

A: Short term debt financing are also referred to as current liabilities.These are the financial…

Q: Why should an investor use debt?

A: Debt investments represent the loan which an investor lends to earn interest along with the…

Q: Explain the nature of long term debt.

A: Nature of long-term debt: Long-term debts are the obligations of the company that are required to…

Q: How do premiums and discounts on long-term debt securities affect interest expense?

A: Long term debts are used by the large organisations to raise the fund and utilise them for various…

Q: What are the advantages and disadvantages of short-term versus long-term debt asidentified in this…

A: Short term debt: Short term debts are debts or financial commitments that are expected to be settled…

Q: What are the advantages and disadvantages ofusing short-term debt as a source of financing?

A: Short-term debt: It is a kind of debt that is repaid in a small span of time or within a year. The…

Q: Discuss how a form of debt can be classified as both Current and Long-Term Liabilities.  Why do…

A: Long Term Liabilities are the liabilities that become due for more than one year. They are the…

Q: What is informal debt restructuring?

A: Debt restructuring is a method wherein a company or an entity experiencing financial distress and…

Q: is the potential impact of long-term borrowing?

A: Long-term borrowings: Long term borrowings help companies to attain their long term financial…

Q: WHY IS EQUITY MORE EXPENSIVE THAN DEBT?

A: Equity is owner's equity or shareholder's equity. It represents the value that would be returned to…