Floating-rate debt is advantageous to investors because the interest rate moves up if market rates rise.Since floating-rate debt shifts interest rate risk to companies, it offers no advantages to issuers.

Question

Quizplus · Accepted Answer

Floating-rate debt can offer advantages to issuers because the interest rate adjusts with market rates, which can make it easier for them to manage their debt and avoid default. Additionally, floating-rate debt can be seen as less risky to investors than fixed-rate debt, which can make it easier for issuers to attract investors and raise funds.

Floating-Rate Debt Is Advantageous to Investors Because the Interest Rate