If current interest rates are low,and therefore expected to increase in the future,a firm wanting to reduce its interest rate risk would hold debt with longer maturities.

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If current interest rates are low, it would be more advisable for a firm to hold debt with shorter maturities. This is because when interest rates rise, bonds with longer maturities will experience greater price declines than bonds with shorter maturities. Therefore, holding shorter-term debt would reduce the firm's interest rate risk in a rising interest rate environment.

If Current Interest Rates Are Low,and Therefore Expected to Increase