If the Yield Curve Is Upward Sloping,then Short-Term Debt Will

question 93

True/False

If the yield curve is upward sloping,then short-term debt will be cheaper than long-term debt.Thus,if a firm's CFO expects the yield curve to continue to have an upward slope,this would tend to cause the current ratio to be relatively low,other things held constant.

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Definitions:

Operating Leverage

The degree to which a firm can increase operating income by increasing revenue, a measure of how sales growth translates to growth in operating income.

Margin of Safety

The difference between actual or expected sales and the break-even point. It measures how much sales can drop before a business incurs a loss.

Relevant Range

The scope of actions where the assumptions regarding variable and fixed costs hold true.

Laser Printers

Devices that utilize a laser beam to produce images on paper, known for their speed and high print quality.