When market rates of interest decrease,the use of floating-rate debt benefits
A)investors.
B)issuing companies.
C)all parties.
D)no one.

Question

Quizplus · Accepted Answer

When market rates of interest decrease, the use of floating-rate debt benefits issuing companies as they will have to pay less interest on their outstanding debt. Investors who hold the floating-rate debt will earn less interest income, so they are not the ones who benefit from the decrease in interest rates. Therefore, the best choice is B.

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