Suppose that a firm is facing an upward-sloping yield curve and needs to borrow money to invest in production. Does this mean that the firm should consider borrowing only at short-term rates?
A. Yes, using short term financing will give the firm the lowest possible interest rate over the life of the project.
B. No, the firm needs to take the volatility of short term rates into account.
C. No, an upward sloping yield curve means that the firm will get a lower interest rate if it uses long term financing.