A Firm Will Borrow Long-Term

question 56

Multiple Choice

A firm will borrow long-term

• A) if the extra interest cost of borrowing long-term is less than the expected cost of rising interest rates before it retires its debt.
• B) if the extra interest cost of borrowing short-term due to rising interest rates does not exceed the expected premium that is paid for borrowing long-term.
• C) if short-term interest rates are expected to decline during the term of the debt.
• D) if long-term interest rates are expected to decline during the term of the debt.

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Definitions:

Position Power

The authority or influence derived from one's formal role or position within an organization, allowing them to direct or influence others.

Personal Power

The influence or authority a person has over others, derived from their expertise, skills, or personality.

Public Interest Groups

Organizations that advocate for issues they believe to benefit the general public, including environmental protection, consumer rights, and social justice.

Common Good

A concept that refers to the benefit or interests of all members within a society.