Which Statement Is Correct

Which statement is correct?

A) Firms should generally finance all of their assets with long-term debt.
B) Firms that follow restrictive financial policies can generally avoid short-term debt financing.
C) Short-term borrowing is generally more expensive than long-term borrowing.
D) Long-term interest rates tend to be more volatile than short-term rates.
E) A firm is less apt to face financial distress if it adopts a flexible financial policy rather than a restrictive policy.

Correct Answer:

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