Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

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Chapter 21, Problem 6Q

Summary Introduction

To discuss: Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

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From the standpoint of the borrower, is long-term or short-term credit riskier? Explain. Would it ever make sense to borrow on a short-term basis ifshort-term rates were above long-term rates?

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What is the indifference point under the net present value? When would there be a discount on a loan? How about a premium? Explain the purpose of the net present value.

Answer 2

Question

Chapter 21, Problem 6Q

Summary Introduction

To discuss: Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

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Answer 3

Question

Chapter 21, Problem 6Q

Summary Introduction

To discuss: Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

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Answer 4

Question

Chapter 21, Problem 6Q

Summary Introduction

To discuss: Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

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Answer 5

Chapter 21, Problem 6Q

Summary Introduction

To discuss: Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

Answer 6

Chapter 21, Problem 6Q

Summary Introduction

To discuss: Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

Answer 7

Chapter 21, Problem 6Q

Summary Introduction

To discuss: Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

Answer 8

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Answer 9

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Answer 11

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Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

Solution Summary: The author explains that short-term credit risk is riskier from the view of borrower and would it ever be loaned on a short basis if short term rates were on top of long terms.

To discuss: Whether short-term or long-term credit risk is riskier from the view of borrower and would it ever be borrow on a short basis if short term rates were on top of long-term rates.

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Chapter 21 Solutions