Suppose you work for a company that decides to borrow $100 million for 10 years to finance an expansion of its factories. The yield curve is currently steeply upward sloping. 

The president wants to have the lowest interest cost of borrowing and asks you whether the firm should borrow by issuing a 10-year bond or a series of 1-year bonds. What would you recommend? Explain your reasoning?

Answer rating: 100% (QA)

Given that the yield curve is steeply upward sloping it means that longterm interest rates are highe... View the full answer