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In class, we discussed three theories of the term structure of interest rates (the yield...

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Accounting

In class, we discussed three theories of the term structure of interest rates (the yield curve) and their implications for firm borrowing. The Liquidity Preference theory implies that firms A. can benefit by borrowing short term rather than long term B. should only borrow using long-term loans. C. should never borrow money D. should borrow only if the prime rate of interest is above 12 percent. E. should borrow money only if the prime rate of interest is below 8 percent.

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