Firms generally choose to finance temporary current operating assets with short-term debt because

a. the yield curve is normally downward sloping.

b. short-term interest rates have traditionally been more stable than long-term interest rates.

c. short-term debt has a higher cost than equity capital.

d. matching the maturities of assets and liabilities reduces risk under some circumstances, and also because short-term debt is often less expensive than long-term capital.

e. a firm that borrows heavily on a long-term basis is more apt to be unable to repay the debt than a firm that borrows short term.