A Firm Will Borrow Long-Term

Multiple Choice

A firm will borrow long-term

A) if the extra interest cost of borrowing long-term is less than the expected cost of rising interest rates before it retires its debt.
B) if the extra interest cost of borrowing short-term due to rising interest rates does not exceed the expected premium that is paid for borrowing long-term.
C) if short-term interest rates are expected to decline during the term of the debt.
D) if long-term interest rates are expected to decline during the term of the debt.