Suppose you believe that the economy is just entering a recession. Your firm must raise capital immediately,
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Question:
Suppose you believe that the economy is just entering a recession. Your firm must raise
capital immediately, and debt will be used. Should you borrow on a long-term or a short term basis? Why?
Suppose a new and more liberal Congress and administration are elected. Their first order
of business is to take away the independence of the Federal Reserve System and to force the
Fed to greatly expand the money supply. What effect will this have:
a. On the level and slope of the yield curve immediately after the announcement?
b. On the level and slope of the yield curve that would exist two or three years in the future?
Please send help. Thank you
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