Range Floaters Pay Interest Only If a Specified Interest Rate

question 10

True/False

Range floaters pay interest only if a specified interest rate falls outside of a given range.

---

Definitions:

Initial Investment

Initial investment refers to the amount of money initially laid out for an investment project or venture.

Profitability Index

The present value of a project’s cash inflows divided by the investment required.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Internal Rate

Often refers to the internal rate of return (IRR), which is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.