When Market Rates of Interest Decrease,the Use of Floating-Rate Debt

question 52

Multiple Choice

When market rates of interest decrease,the use of floating-rate debt benefits

• A)investors.
• B)issuing companies.
• C)all parties.
• D)no one.

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Definitions:

Risk-neutral

A condition or attitude where an individual or entity is indifferent to risk when making investment decisions, caring only about the expected outcome without concern for the variability of returns.

Risk-loving

Refers to individuals or entities that prefer or are willing to take more risks, often for the possibility of higher returns.

Marginal Utility

The additional satisfaction or benefit received from consuming one more unit of a product or service.

Asymmetric Information

One of the parties to a transaction has information relevant to the transaction that the other party does not have.