If the interest rates on shorter term-to-maturity deposits are higher than those of longer term deposits,it is likely that the costs for the longer term financing for a company are:
A) higher.
B) lower.
C) the same.
D) not related.

Question

Quizplus · Accepted Answer

When interest rates on shorter-term deposits are higher than those on longer-term deposits, it typically indicates an inverted yield curve. In such scenarios, longer-term financing costs are generally lower because the interest rates applied to longer-term borrowings are less than those for short-term borrowings.

If the Interest Rates on Shorter Term-To-Maturity Deposits Are Higher