WorksheetsFM2 Long Term Financing
Total questions: 10
Worksheet time: 5mins
What is long-term financing?
Financing with a term of less than one year
Financing with a term of more than one year
Financing obtained from family and friends
Financing provided by venture capitalists
Which of the following is NOT an example of long-term financing?
Bank loans
Trade credit
Bonds
Equity financing
What is a characteristic of long-term debt financing?
No collateral
Short repayment period
Fixed repayment schedule
Low risk to lenders
Which entity typically provides long-term financing to corporations?
Commercial banks
Trade creditors
Suppliers
Customers
What is the primary purpose of long-term financing?
To meet short-term cash needs
To finance day-to-day operations
To fund capital investments
To cover operating expenses
Which of the following is a form of equity financing?
Bank loan
Corporate bonds
Preferred stock
Mortgage
What is a disadvantage of long-term financing through issuing bonds?
Limited access to capital markets
Fixed interest payments
Decreased financial leverage
Potential bankruptcy risk
What is the benefit of long-term financing for businesses?
Lower interest rates
Shorter repayment periods
Enhanced liquidity
Stability and predictability of cash flows
Which financial instrument is commonly used for long-term financing by governments?
Commercial paper
Municipal bonds
Treasury bills
Corporate bonds
What is a characteristic of long-term financing through equity?
Fixed repayment schedule
Interest payments
Ownership dilution
Collateral requirement
