(Solution document) Which following statement is correct?

Which following statement is correct?

1.Firms should generally finance all of their assets with long-term debt.

2.Firms that follow restrictive financial policies can generally avoid short-term debt financing

3.Long-term interest rates tend to be more volatile than short-term rates

4.A firm is less apt to face financial distress if it adopts a flexible financial policy rather than a restrictive policy