A Corporation with Funded Fixed-Rate Debt Might Prefer Floating-Rate Debt

question 16

Multiple Choice

A corporation with funded fixed-rate debt might prefer floating-rate debt if it thought that:

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

---

Definitions:

Notes Receivable

Financial assets representing money owed to a company by customers or others, usually evidenced by a written promissory note.

Accounts Receivable

Monies owed to a company by customers for products or services that have been delivered or used but not yet paid for.

Aging the Accounts

The process of categorizing and reviewing accounts receivable based on the length of time an invoice has been outstanding.

Adjusting Entry

A journal entry made in accounting records to update the balances of accounts at the end of an accounting period.