Short-term debt has a greater risk of liquidity than long-term debt because it must be rolled over more frequently and its use creates more uncertainty concerning future Interest rates a. True Falso

True

1. Short term debt is due more frequently than a long term debt and hence create an uncertainty of liquidity

2. As a short term debt is paid off in a short span and new loan is taken more frequently, the upcoming interest rates would apply to newer debt arrangements.
It creates an uncertainty as interest rates may rise or may fall. Increased interest would increase the cost while fall in Interest rate would cause the short term debt to be comparatively cheaper. While in case of long term debt, there is one agreement of debt for a longer duration, so the arrangements of initial agreement would apply irrespective of market interest rates. And also the borrower gets sufficiently longer time to pay off a long term debt.