Suppose that a firm is facing an upward-sloping yield curve and needs to borrow money to invest in production. Does this mean that the firm should consider borrowing only at short-term rates?

A. Yes, using short term financing will give the firm the lowest possible interest rate over the life of the project. B. No, the firm needs to take the volitility of short term rates into account. C. No, an upward sloping yield curve means that the firm will get a lower interest rate if it uses long term financing.

Based on the scenario described in the following table, determine whether yields will increase or decrease and whether it will be more expesinve or less expeensiveas compared to other palyers in the market, for company to borrow money from the bond market.

Scenario	impact on yield	Cpst of borrowing money from bond markets
A companys financial heath improves	increase/decrease	less or more expensive
XYZ's credit rating was downgraded from AA to BBB.	increase or decrease	less or more expensive
A company uses debt to buy another company. Such an event is called a leveraged buyout.	increase or decrease	less or more expensive
There is an increase in the percevied marketability of a comanys bond, so the liquidity premium decreases.	increase or decrease	less or more expensive