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Why does the steepness of the yield curve influence the interest rates small versus large companies get? Are you saying that if a big company can borrow at 'fe
by JamesBarney 8y ago
Why does the steepness of the yield curve influence the interest rates small versus large companies get?
Are you saying that if a big company can borrow at 'fed rate' + 2% and a small company can only borrow at 'fed rate' + 6% that as the fed rate gets smaller the relative differences in the borrowing rates increases so 8% vs 12% isn't as big of an advantage as 3% vs 7%?
- Fjolsvith 8y agoFrom the viewpoint of the small business owner, I still have to come up with the 4% difference out of my profit margin. If I'm competing with a big corporation, that is a significant disadvantage.
- navigatesol 8y agoIt comes out of their profit margin too, though. And I'll bet the margins of good, small businesses are as good or better than large businesses. Of course, large businesses can generally borrow at lower rates, but that's the way "risk" works.