Question

Funds from short-term loans can generally be obtained faster than from long-term loans for at least two reasons: (1) when lenders consider long-term loans they must make a more thorough evaluation of the borrower's financial health, and (2) long-term loan agreements are more complex.

a) true
b) false

Answer 1

It is true that short-term loans can be obtained faster than long-term loans due to less extensive evaluations required and simpler agreements. Confidence in future repayment ability affects demand for financial capital in the market.

Step-by-step explanation:

The statement that funds from short-term loans can generally be obtained faster than from long-term loans is true. The reasons for this include: (1) the need for a more thorough evaluation of the borrower's financial health by lenders for long-term loans, and (2) the complexity of long-term loan agreements. In the context of financial markets, college students often require loans immediately to pay for their expenses and plan to repay these loans after they become employed. Similarly, businesses may seek loans for investments that will not yield returns for many years. In both cases, the confidence to repay in the future can affect the demand for financial capital.