Finance questions?

Which fluctuates more long-term or short-term interest rates? And why?

If i beleive that the economy is just entering a recession and my firm needs to raise capital immediately, should I borrow on a long-term or a short-term debt basis? And why?

Thanks for the help!

Short-term fluctuates more because long term is average, so short term rates are more like a deviation.

If the economy enters into the recession, people have less money and are therefore forced to save less. It would mean there is less money in the bank, which would elevate the demand causing the interest rates go higher. Higher interest rates, from the firm's viewpoint means that it would have to pay more for the capital.

If the economy was doing good, people would be saving more, there would be more money in the banks, causing the demand go lower, which would reduce the interest rates. Again, reduced interest rates means you would have to pay less for the money borrowed. (this option is better if you had a firm)

If the country was in a recession and need to raise capital immediately, then borrow the money on a short-term basis in order to reduce interest costs.

long term and long term becuaese its best in the long run

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