Response to the following questions:
1. From the standpoint of the borrower, is long-term or short-term credit riskier? Explain. Would it ever make sense to borrow on a short-term basis if short-term rates were above long-term rates?
2. "Firms can control their accruals within fairly wide limits." Discuss.
Is it true that most firms are able to obtain some free trade credit and that additional trade credit is often available, but at a cost? Explain.
3. What kinds of firms use commercial paper?