参考答案：A

解析：

If the firm’s operating cash flows tend to increase and decrease in line with short-term interest rates, issuing variable rate debt can reduce the volatility of its net cash flows. However, if its operating cash flows tend to change in the opposite direction from short-term interest rates, issuing variable rate debt would magnify the effect of interest rate changes on its net cash flows. Whether the yield curve is upward or downward sloping, the expected cost of floating-rate debt over a given horizon is the same.