Suppose two firms want to borrow money from a bank for a period of one year. Firm
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Question:
Suppose two firms want to borrow money from a bank for a period of one year. Firm A has excellent credit, whereas Firm Bs credit standing is such that it would pay prime percent. The current prime rate is percent, the year Treasury bond yield is percent, the month Treasury bill yield is percent, and the year Treasury note yield is percent. Now suppose that Firm B decides to get a term loan for years. What is the new loan rate for Firm B and how does the longer term impact its borrowing costs?
Firm Bs loan rate
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