A Corporation with Long-Term Fixed-Rate Debt Might Prefer Floating-Rate Debt

question 58

Multiple Choice

A corporation with long-term fixed-rate debt might prefer floating-rate debt if they thought that:

• A)interest rates would be declining.
• B)interest rates would be increasing.
• C)their bond rating might be lowered.
• D)their bonds were going to be converted into equity.

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Definitions:

Neurotic Behavior

Patterns of behavior characterized by excessive anxiety, insecurity, or obsession, often resulting in functional impairment or distress.

Circles and Ellipses

Shapes with distinct properties; a circle is a set of points equidistant from a center point, whereas an ellipse has two focal points and includes all points for which the sum of the distances to these foci is constant.

Taste Aversion Studies

Research that examines how animals and humans learn to avoid food that has been associated with illness or discomfort.

Prepared Associations

Pre-existing tendencies in animals, including humans, to easily learn certain associations compared to others, due to evolutionary adaptations.