Floating-Rate Debt Is Advantageous to Investors Because the Interest Rate

question 15

True/False

Floating-rate debt is advantageous to investors because the interest rate moves up if market rates rise.Since floating-rate debt shifts interest rate risk to companies, it offers no advantages to issuers.

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Definitions:

Job-Order Costing

A system that assigns manufacturing costs to each product, providing a way to calculate the cost per item or job specifically.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products or job orders, based on a planned amount of activity.

Machine-Hours

A measure of production output or activity based on the number of hours machines are run, used in allocating machine-related costs to products.

Variable Manufacturing Overhead

Costs in the manufacturing process that fluctuate with the level of production output, such as utilities or materials.