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:

Excise Tax

A tax levied on the sale or use of specific products or transactions, often included in the price of goods like gasoline, alcohol, and tobacco.

Supply Shift

A change in the availability of a product or service, often influenced by factors such as production costs and technological advances, shifting the supply curve.

Excise Tax

A type of tax imposed on specific goods, services, or activities, often included in the price of products like gasoline, alcohol, and tobacco.

Tax Borne

The final economic burden of a tax, indicating who ultimately bears the cost of taxation.