Question
Fairweather Corporation has been using an aggressive financing policy in managing its working capital for the last 3 years. The CFO recently found that the
Fairweather Corporation has been using an aggressive financing policy in managing its working capital for the last 3 years. The CFO recently found that the US yield curve had a dramatic change in shape from that of one year ago as shown in the figure below, where the black line represents the current yield curve, while the blue line represents the yield curve of last year. Given this change, will you suggest the company consider changing its financing policy or not? Please explain your point. If change is needed, what will be your suggestion and why?
Figure: US yield curve as of 4/23/2023, https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx
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