2. A conservatively financed firm would 3. The theory of the term structure o

2. A conservatively financed firm would 3.
The theory of the term structure of interest rates which suggests that
long-term rates are determined by the average of short-term rates
expected over the time that 4.
Kuznets Rental Center requires $1000000 in financing over the next
two years. Kuznets can borrow long-term at 9 percent interest per year
for two years. Alternatively Kuznets can borrow short-term and pay 7
percent interest in the first year. Then Kuznets projects paying 10
percent interest in the second year. Assuming Kuznets pays off the
accrued interest at the end of each year which of the following
statements is true?5. During tight money periods 6. Normally permanent current assets should be financed by