In economic conditions characterized by short-term interest rates which exceed long-term interest rates, the financing strategy which would maximize profits is ________ strategy.
A) the aggressive
B) the conservative
C) the trade-off
D) a seasonal

Question

Quizplus · Accepted Answer

In economic conditions where short-term interest rates are higher than long-term interest rates, the cost of borrowing money in the short term will be higher than in the long term. Therefore, a conservative financing strategy would be more appropriate, where the company would borrow money using longer-term loans to reduce the cost of borrowing. This strategy would help maximize profits by reducing costs and reducing the risk of financial instability due to short-term fluctuations in interest rates. The other options, aggressive, trade-off, and seasonal, do not take into account the current economic conditions and would not be as effective in maximizing profits.

In Economic Conditions Characterized by Short-Term Interest Rates Which Exceed