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

Question

Quizplus · Accepted Answer

When short-term interest rates exceed long-term interest rates, it is known as an inverted yield curve. This can be an indicator of an economic recession, and it is recommended to use a conservative financing strategy to minimize risk. This may involve using long-term financing instead of short-term financing, locking in fixed interest rates, and reducing overall debt levels. Therefore, the best choice would be the conservative financing strategy.

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