Which of the Following Statements with Respect to Floating-Rate Debt

question 13

Multiple Choice

Which of the following statements with respect to floating-rate debt is incorrect?

• A)If the market rate of interest increases,the market value of the floating-rate debt will remain the same.
• B)If the market rate of interest decreases,the cash interest payment required by the issuing company would decrease.
• C)If the market rate of interest increases,the investors benefit while the issuing corporation does not benefit.
• D)If the market rate of interest decreases,both the issuing company and the investors benefit.

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Definitions:

Acquired Needs Theory

A motivational theory that suggests human needs for achievement, affiliation, and power are developed over time based on life experiences.

Need For Power

An individual's desire for influence or control over others, motivating them to seek positions of authority.

Need For Affiliation

The desire to establish and maintain good relations with people.

Need For Affiliation

A social need that drives individuals to seek and form relationships with others, motivated by a desire for companionship and acceptance.