An Inverse Floater and a Super-Inverse Floater Are More Valuable

question 8

Multiple Choice

An inverse floater and a super-inverse floater are more valuable to a purchaser if:

• A)interest rates stay the same.
• B)interest rates fall.
• C)interest rates rise.
• D)held for a long time.
• E)None of the above.

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Definitions:

Units-of-production

An approach to depreciation that apportions the price of an asset throughout its functional life, contingent on the total units it generates.

Salvage Value

The forecasted residual valuation of an asset at the termination of its utility life.

Useful Life

The estimated period of time an asset is expected to be usable for its intended purpose.

Granite Quarry

A site where granite is extracted from the earth for use in construction and architectural applications.