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.

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Definitions:

Revenue Account

An account that tracks the income a company generates from its business activities, excluding expenses.

Asset

A valuable economic entity held or overseen by an individual, business, or state, expected to bring about future advantage.

Sales

The total revenue generated from the sale of goods or services over a specific period.