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Sir
Long term funds are more expensive and less risky
And
Short term funds are less expense and more risky
Am I correct ?
But why are the long term funds less risky sir
Is it because of tax shields that the long term funds are less risky compared to short term acquisition of funds ?
No, it is nothing to do with tax shields.
It is partly because long-term borrowing is usually at fixed interest rates and so they are not at risk of interest rates changing. Also, there is no chance of the borrowing being repayable immediately as is a risk with overdraft borrowing.
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