alleryStart learning →What separates a short-term loan from a long-term loan?
AThe short-term loan comes due within one year
BThe short-term loan is always under $100,000
CThe short-term loan is always paid in advance
DThe short-term loan carries no interest at all
Answer & Solution
Correct answer: A. The short-term loan comes due within one year
1. A short-term loan comes due within one year.
2. A long-term loan has a maturity greater than one year.
3. Short-term financing appears as a current liability on the balance sheet and is used to finance current assets and support operations.
4. Size, prepayment and interest have nothing to do with the split, which turns purely on maturity.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 16 "Understanding Financial Management and Securities Markets", section 16.3 Obtaining Short-Term Financing_
Keep practising Financial Management and Securities Markets
Browse all Financial Management and Securities Markets questions for US CMA Part 2, or explore more Financial Management topics.
Related questions
Since the Sarbanes-Oxley Act, what do CFOs consider their top priority?How did the NYSE answer the NASDAQ's head start in electronic trading?What does Regulation FD require of public companies?The Securities Investor Protection Corporation insures each customer's account up to what What is insider trading?What does the Securities Act of 1933 require of a new securities issue?Electronic communications networks let traders deal directly in what is known as which marThe NASDAQ lists more companies than the NYSE. On which measure does the NYSE still lead?