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:

Bivariate Distributions

Probability distributions that involve two random variables, analyzing the correlation and dependencies between them.

Expected Values

The predicted value of a variable, calculated as the sum of all possible values each multiplied by the probability of its occurrence.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values.

Mean

Mean is the arithmetic average of a set of numbers, calculated by dividing the sum of these numbers by the count of numbers in the set.