When the term structure of interest rates is downward sloping and interest rates are expected to decline, the
A) financial manager generally borrows short-term.
B) financial manager borrows at the lower long-term rates.
C) corporation's ratio of short-term to long-term debt is low.
D) None of the options are true.

Question

Quizplus · Accepted Answer

When the term structure of interest rates is downward sloping and interest rates are expected to decline, the financial manager generally borrows short-term to take advantage of the lower short-term rates.

When the Term Structure of Interest Rates Is Downward Sloping