[Meddik]

Which of the following is correct?

A.

Short-term credit can be obtained more quickly than long-term credit, but long-term credit is more flexible.

B.

Short-term credit is generally less costly than long-term credit due to the prepayment penalties associated with long-term credit.

Incorrect C.

The shape of the yield curve implies that interest costs will generally be higher using long-term credit than short-term credit.

D.

Short-term credit can generally be obtained quicker than long-term credit; however, short-term credit holds more risk due to the need to renew more often.

You answered C. The correct answer is D.

Short-term credit can generally be obtained quicker than long-term credit.

Generally short-term credit is more flexible than long-term credit.

Short-term credit is generally less costly than long-term credit as shown by the yield curve.

Prepayment penalties are generally associated with long-term credit, but these penalties are not the basic reasons for a higher cost for long-term credit.

Short-term credit holds more risk than long-term credit due to the need to renew more often.

I do understand why D is correct, but isn’t C correct as well? The given answer explanation even says ST credit is generally less costly than LT credit as shown by the yield curve. I feel like it’s obvious but I’m just so burnt out I’m not reading it correctly.

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