Why might a company choose to finance permanent working capital with short-term debt? (Select all of the choices that apply.)

A. Financing permanent working capital with short-term debt is an common financing policy and is not considered risky.

B. A firm may decide to use short-term debt to finance permanent working capital if it believes that one or more market imperfections exist.

C. Short-term debt may have lower agency and lemons costs than long-term debt.

D. Management may believe its ability to produce future cash flows will have a positive impact on its credit rating in the future. Thus, management may elect to use lower-cost, short-term debt to finance its permanent working capital for the time being with the expectation that it will refinance it with long-term debt once the market has recognized the firm's improved future prospects and rewarded it with a higher credit rating, which can lower the cost of long-term debt to the firm.

E. Short-term debt is less sensitive to a firm's credit quality than is long-term debt and so will be less affected by management's actions or information